PRIVATE BUSINESS

Selection

Ordered,
	That Mr Geoffrey Clifton-Brown be discharged from the Committee of Selection and Mr Andrew Robathan be added to the Committee.—[Mr. Watts.]

Oral Answers to Questions

DEPUTY PRIME MINISTER

The Deputy Prime Minister was asked—

House Building Targets

Stewart Jackson: What assessment the Government have made of the infrastructure needed to support their communities plan and regional house building targets.

David Miliband: The Government believe that infrastructure investment must support housing growth, using funding from mainstream programmes, investment by the private sector and top-up funding from the growth areas programme. For the first five years of the sustainable communities plan, we have committed £1.2 billion of growth area funding to supplement £3.5 billion of transport investment.

Stewart Jackson: I thank the Minister for that answer. Given that in my region, the eastern region, a recent independent report found that £18.5 billion will be required for investment in infrastructure over the next 15 years, may we have a cast-iron guarantee from the Minister that the planning gain supplement announced in the pre-Budget report will not be another of the Chancellor's stealth taxes, and will be ring-fenced to pay for the much-needed infrastructure in the coming years?

David Miliband: A measure that is announced in a pre-Budget statement is an unusual definition of a stealth tax. I do not think that my right hon. Friend the Chancellor of the Exchequer could have been clearer and more open about it. I welcome the hon. Gentleman's support for the planning gain supplement, which provides that those who own land and benefit from planning gain should make a contribution to the essential infrastructure. My right hon. Friend has made it clear how that will benefit local people. I welcome the hon. Gentleman's support. I hope that he will persuade Opposition Front Benchers accordingly.

Richard Burden: Does my right hon. Friend accept that this is an important question because house building is important? Is he aware that, for instance, in Birmingham many of the cases that are brought to my advice surgeries involve people who are having difficulty in finding a home? I have some criticisms of Birmingham's handling of homelessness, but there is an urgent need to increase not only house building but the availability of affordable houses for rent as well as purchase.

David Miliband: My hon. Friend makes an important point. The House will know that although about 190,000 new households are formed every year, we are building only 150,000 new houses every year. That explains some of the affordability challenges that we face. That speaks directly to my hon. Friend's point, which is that we must increase house building both in the private sector and in the social housing sector.

Louise Ellman: Does my right hon. Friend agree that local transport links are essential to successful housing development as part of regeneration? Will he agree to support an alternative to Merseytram to link local areas on Merseyside to employment areas and local amenities now that the Government have rejected that vital Merseytram project?

David Miliband: It is tempting for me to make transport policy this morning. However, I will pass on my hon. Friend's concerns to the Department for Transport.
	My hon. Friend is right that transport is a vital part of the infrastructure investment that we are discussing. The Department for Transport is making some allocations today in respect of capital funding, which will be of interest to the entire House.

Roger Gale: Does the Minister recognise that the Deputy Prime Minister's apparent desire to smother the garden of England with housing is leading to badly built houses, unsupported by adequate schools and medical services at primary level and by roads? Does he think that that is desirable?

David Miliband: My right hon. Friend the Deputy Prime Minister is standing up for the next generation, who need greater housing provision. I am sorry that the hon. Gentleman is not joining him in doing that. He talks about smothering the garden of England. Currently, 11.4 per cent. of the south-east is covered by development. My right hon. Friend proposes to raise that to 11.9 per cent. That is not smothering the garden of England but delivering the houses that the next generation needs.

Jeremy Browne: Thousands of new houses have been built in Taunton Deane and elsewhere without adequate shops, public transport or other necessary amenities. Does the Minister share my view that it is one thing to construct a group of houses but another thing to build a community?

David Miliband: I agree completely with the hon. Gentleman that we need decent communities as well as decent housing. That is why we are putting so much stress on building a strong economy. We do not control and own shops ourselves—my party has moved on from that. We are committed to transport and other areas of infrastructure that are essential if we are to build the decent communities that we are discussing.

Caroline Spelman: It was just a touch stealthy that the right hon. Gentleman did not mention the new land development tax for infrastructure from the outset. Perhaps he shares my scepticism that it may never emerge from the Treasury intact. More importantly, on 5 December it was said that this tax would inevitably have to be controlled by unelected regional bodies. Is this simply taxation without any representation?

David Miliband: We should congratulate the hon. Lady on her reappointment. Other Departments' loss is our gain, because I could not have made clearer the position on the planning gain supplement. We believe that people who hold land and benefit from planning permission should contribute to infrastructure costs—that is the right balance. We have made it clear that the majority of returns from the planning gain supplement will be used within the local authority area. [Interruption.] If the hon. Lady contains herself she might learn something. The majority of the money will be used within the local authority area, and the rest will be used to support local people. I am sure that she agrees that it makes sense to build sewerage works and infrastructure development, which, while they may not be within the local authority area, will benefit local people. The money spent on sewerage works and transport may not all be spent directly in the area, but it will still benefit local people.

Sarah Teather: What environmental factors do the Government take into account in their assessment of infrastructure and house building? Will the Minister confirm that the Office of the Deputy Prime Minister has not signed up to any public service agreement on climate change?

David Miliband: The sustainability appraisals that are at the heart of the environmental work of the ODPM are central to such development. I should have thought that the hon. Lady would welcome the new guidance issued by my hon. Friend the Minister for Housing and Planning, which shows a 40 per cent. increase in the energy efficiency of all new housing.

Sarah Teather: indicated dissent.

David Miliband: The hon. Lady may shake her head and say that it is not good enough, but it is better than standards elsewhere in Europe, so I should have thought that it was good enough for her.

House Building

Andrew Turner: What assessment he has made of the effect of international migration on the need for house building in the east and south of England.

Yvette Cooper: International migration is a factor in UK population growth, and it is important to the growth of the economy. Household growth is higher than population growth due to demographic and lifestyle changes, particularly an increase in the number of people living alone. The result is growing demand for housing, which affects the south and east of England.

Andrew Turner: I thank the hon. Lady for her reply. Is she aware that Home Office figures accept that migration is such that it requires a new town the size of Slough every two years or a new city the size of Birmingham every 10 years to accommodate people coming to this country? Whose job is it in Government to balance the needs of the economy, to which she referred, with the need to protect the environment? Which Minister is responsible?

Yvette Cooper: I can see the way in which the Tory party wants to campaign on housing policy. We look at the projections for household growth, two thirds of which is the result of more people living alone. The figure will grow from 3.4 million in 1971 to 8.5 million in 2012. It is true that the 29 per cent. of NHS doctors who were born abroad need homes to live in, as do pensioners and widows who live alone as well as the next generation of first-time buyers. In the end, that is the issue. The hon. Gentleman's policy would mean that 70 per cent.—

Mr. Speaker: Order.

Phyllis Starkey: Will the Minister confirm that the major sources of population growth in the south of England are migration to the south-east from London and increased longevity? In relation to the second group, what steps are being taken to make sure that new house building in the south takes account of the needs of the elderly population?

Yvette Cooper: My hon. Friend is exactly right. We need to take account of an ageing and growing population. If we do not do so, in 20 years' time, 70 per cent. of 30-year-old couples who are first-time buyers will not be able to afford their own home. That is the consequence of sticking with existing rates of house building, which is the approach taken by the Opposition. Their leader may say all those nice things about not campaigning on immigration—

Mr. Speaker: Order. The hon. Lady defies the Chair when she keeps going on about Opposition policy. She will not do so again.

James Gray: I very much welcome the statement that the Chancellor of the Exchequer made about shared ownership in the pre-Budget statement. It is very valuable, and a great deal of money is attached to it. However, will the Minister confirm that it is not new money, as it comes out of the overall housing budget, so every penny spent on shared ownership schemes means that less will be spent on refurbishment or new local authority housing?

Yvette Cooper: No, the hon. Gentleman is wrong. The proposals that we announced as part of the pre-Budget report are about building a public-private partnership to get more private developers and mortgage lenders to increase the amount of investment in shared equity housing. We think it is right to support shared equity housing. We have set out a big increase in investment in social housing and in shared equity housing. We believe it is right to go further and to bring in additional private sector money as well as additional public sector funding, so that we can support the next generation of home owners.

Lyons Review

Jim Cunningham: If he will make a statement on progress with the Lyons review.

David Miliband: Sir Michael Lyons will publish an interim report tomorrow setting out his preliminary thinking, and publish research and analysis that he has undertaken so far.

Jim Cunningham: Will my hon. Friend assure the House that, as he considers the Lyons report and local government funding, he will consult local government widely? I am sure my hon. Friend knows that there has always been serious concern about local government funding, particularly the formula element.

David Miliband: I can confirm that written into Sir Michael Lyons' terms of reference is a commitment to work with local government. Obviously, it is essential that we do so. His proposals will cover the long-term financing of local government, and that must be done in partnership with local government.

Eric Pickles: The Chancellor last week abolished the pensioners' £200 council tax rebate after it had been in operation for only one year. Is Sir Michael Lyons expected to estimate the number of additional pensioners who will face imprisonment for non-payment? Does the Minister personally regret that the Government have reneged on their promises to pensioners?

David Miliband: The answer to that question is no. No new estimates are being provided of that, no new powers of entry are being given to the Valuation Office Agency, no new fines are being invented, there will be no new higher bills for inheritance and capital gains tax—all of which have been alleged—and, surprisingly enough, no new proposals for the slaughter of first-borns will be announced by Sir Michael Lyons, either.

Council Housing

Bob Russell: How many council houses have been built since 1997.

Jim Fitzpatrick: Since 1997 1,130,000 new dwellings have been constructed, of which registered social landlords built 177,000 and local authorities 1,365.

Bob Russell: When the Minister and the Deputy Prime Minister arrived at Westminster tube station this morning, did they observe the illuminated poster from Shelter showing the Chamber occupied by homeless families, along with the slogan
	"Overcrowded housing robs children of room to grow. Britain needs more homes now"?
	Noting that in the eight years from 1979 the Thatcher Government built 415,814 council houses, is it a success of the new Labour Government that in eight years they have built, according to the House of Commons Library, 4,278?

Jim Fitzpatrick: Shelter is a much respected organisation and we welcomed its latest report. However, the hon. Gentleman knows that when we came to power in 1997, our housing priority was the £19 billion backlog in social housing repairs and the 2 million homes that had fallen below the decency threshold. We have attacked that problem. We are well on our way to making sure that, by 2010, 2 million homes will be up to the decency threshold. We have cut rough sleeping by three quarters, and we are on our way to helping 100,000 new people into their first homes by 2010.

Lynne Jones: The Government response to the Barker review last week stated that the supply of social housing would be a priority for the spending review in 2007, but the Barker report was published with the Budget in 2004, recommending an increase of 23,000 new social homes a year. As I told both the Deputy Prime Minister and the Chancellor in 2004, Birmingham desperately needs at least another 3,000 social homes a year. Why must we wait until 2007 for the increase in social housing supply that is so desperately needed in Birmingham and elsewhere?

Jim Fitzpatrick: My right hon. Friends must have listened, because the Government have accepted the key recommendation of the Barker review, which is a step change in housing. We are increasing funding for socially rented housing, and we are also increasing new build from 20,000 a year to 30,000 a year. By 2008, we expect 75,000 new homes in the social rented sector, as well as bigger targets between now and 2015.

Mark Pritchard: Is the Minister aware that there is currently no homelessness provision for adults in my constituency in Shropshire as a result of the mixed messages that the Government have given out since 1997? What will he do for those who find themselves homeless on the streets of Shropshire this year and who do not have access to grace and favour apartments?

Jim Fitzpatrick: As I said, since 1997 we have cut rough sleeping by three quarters and ended the scandal of families with children experiencing long stays in cramped bed and breakfasts. We are providing £5 billion between 2004 and 2006 and £3.9 billion between 2006 and 2008. The Deputy Prime Minister has ensured that housing is a main priority for this Government, and we are very proud of our record.

Robert Wareing: Does the Minister agree that it is abysmal that a  Labour Government have built only about 1,000 council houses? Most social housing is run by housing associations, which are not accountable to the electorate. When people lived in council houses, they knew that their councillors would take up their cases on matters such as maintenance, but all hon. Members know that that situation has changed. We should reverse the position by transferring stock from housing associations to councils.

Jim Fitzpatrick: With respect, my hon. Friend is wrong. The Government made a clear choice to allow registered social landlords to seek private sector capital, of which an additional £6.5 billion has been spent on social housing, including the social rented sector. The matter involves value for money and choice for local authorities. I do not agree with my hon. Friend that there is no social control—registered social landlords have very good communications and their boards are staffed by councillors as well as representatives of the local community, who are doing their best for their neighbourhoods.

Alistair Burt: Back in 1997, the Prime Minister pledged to do all in his power to end the scourge of temporary accommodation. Bearing in mind the fact that the number of people living in temporary accommodation will have doubled by this Christmas, what does that say about the Government's pledges and the Prime Minister's power?

Jim Fitzpatrick: In the past year, homelessness has dropped by 23 per cent. As I have said, we have ended the scandal of families with children living in bed-and-breakfast accommodation. Those who are awaiting permanent accommodation are in accommodation of a much higher standard than anything experienced before 1997. The money that we are putting into housing, including the step change in new build, is unprecedented.

Adrian Bailey: I welcome the Minister's comments about investment in repairs to council housing, which has transformed the housing stock in my local authority. Does the Minister recognise that some people—in particular, young people—still cannot get into either social housing or the private sector? Will he introduce the plans on shared equity and greater social housing expenditure as a matter of urgency?

Jim Fitzpatrick: My hon. Friend has made a good point. Notwithstanding how much is being done—149 stock transfers, 56 arm's length management organisations, 37 private finance initiatives and £6.5 billion of private sector funding—a lot remains to be accomplished, but as a result of our programme, more than 1 million people now live in homes above the decent homes threshold who did not do so before 1997.

Local Government Finance

James Duddridge: What representations he has received regarding the local government finance settlement.

Phil Woolas: There were 369 representations made to the consultation on options for the grant distribution system that was held over the summer. We also received a variety of correspondence on the options between the end of this consultation and the announcement of the settlement on 5 December.

James Duddridge: I thank the Minister for that reply and I thank the Under-Secretary for agreeing to meet Southend council on 9 January. However, what general advice would the Minister give local authorities across England about the ever-increasing Government requirements for spending on things such as pensions, job evaluation, civil contingencies and waste, which are extra costs that are not covered by inflationary or near-inflationary increases?

Phil Woolas: I would advise those councils to read the words of the leader of the Local Government Association, a Conservative councillor, who acknowledged that the Government had met their new burdens obligations in the settlement. I would also advise those councils to look at the figures that confirm that by financial year 2007–08 they will have had 10 years of above-inflation increases in their revenue support grant.

Nick Brown: The settlement has left the five district authorities in Tyne and Wear with a shortfall in the moneys necessary to implement the pensioners' concessionary bus travel scheme that the Chancellor announced in the last Budget. I am grateful to the Minister for agreeing to meet me and colleagues from Tyne and Wear to discuss the problem. However, if we are unable to get a satisfactory settlement next week, will it be possible for me and other Members of Parliament representing the county to meet the Deputy Prime Minister to discuss the matter further?

Phil Woolas: I am grateful to my right hon. Friend for his work on behalf of his constituents. He, like me, wants to ensure that all the pensioners get the benefits of the extra £350 million that has been provided across the country for free travel for pensioners. I look forward to next week's meeting with my right hon. Friend, the transport authority and the councils. He will of course be waiting for the outcome of that meeting to see how he can facilitate this policy.

Shire Council Finance

Peter Luff: What representations he has received from shire councils about the level of revenue support for 2006–07.

Phil Woolas: The Office of the Deputy Prime Minister is currently consulting on the provisional local government finance settlements for 2006–07 and 2007–08. We expect to receive several representations on the level of revenue support grant from shire counties and others in response to that consultation.

Peter Luff: Another Christmas, and the people of Worcestershire are being cheated yet again, with the Deputy Prime Minister giving us his traditional but not particularly popular performance of Scrooge. Are not my constituents entitled to ask what the Dickens is going on as they see that the gap between Worcestershire schools funding and that of their neighbours is growing yet again and that their county council is going to make cuts in other services to reach criteria imposed on it by the Minister?

Phil Woolas: I suspect that the hon. Gentleman would have complained whatever the settlement had been, as indeed he has for the past eight years. I can tell the House that over the 10 years to 2007–08, Worcestershire county council will have had an average increase in formula grant of some 4.5 per cent. per year—significantly above the level of inflation.

Departmental Contingency Planning

John Robertson: What discussions his Department has had with the Scottish Executive and the Welsh Assembly on his Department's civil resilience responsibilities in the event of a terrorist attack.

John Prescott: The ODPM works closely with the Home Office, which has the policy lead in respect of resilience and response to terrorist attack. We are leading on several fire resilience projects, in each case working closely at all levels with respective counterparts in Scotland and Wales. As I told the House on Monday, the measures that my Department has put in place substantially improved our ability to respond to emergencies, and yet again we had a key role to play in tackling the fire at Buncefield.
	I take the opportunity to confirm to the House that the Buncefield fire is under control and that small fires from damaged valves are being allowed to burn under supervision. Monitoring the effects of the plume on the environment, health and food has been under way since the start of the incident, and I intend to visit the site on Saturday.
	I pay tribute to the bravery, dedication and professionalism of the emergency services. The House will be amazed at the criticism that was made of their training and preparedness, especially while they were still fighting the fire.

John Robertson: I thank my right hon. Friend for his comprehensive answer. May I, too, express my admiration for those in the services who fought the fire in Hemel Hempstead? How confident is my right hon. Friend about training sessions in every part of the country and the competence that can be expected from the agencies? How quickly can he ensure that they achieve the same competence as was shown in Hemel Hempstead?

John Prescott: I assure my hon. Friend that training in our services has enabled us to engage in cross-agency training—an exercise that is carried out locally, regionally and nationally. My Office invested heavily in equipment, such as that used in London on 7/7, in the Carlisle floods and in Hemel Hempstead at the weekend. Furthermore, the Civil Contingencies Act 2004 and the Fire and Rescue Services Act 2004 provide the legislative framework. Each of our fire resilience project training programmes enables a consistent, co-ordinated response throughout the English regions. It worked well in Hemel Hempstead and, indeed, in the recent plastics factory explosion in Glasgow.

PRIME MINISTER

The Prime Minister was asked—

Engagements

David Crausby: If he will list his official engagements for Wednesday 14 December.

Tony Blair: This morning I had meetings with ministerial colleagues. In addition to my duties in the House, I will have further such meetings later today.

David Crausby: Antisocial behaviour is of prime concern in Bolton, where the police have used ASBOs and unacceptable behaviour contracts effectively. However, they do that on a shoestring budget. Will my right hon. Friend provide the funds to ensure that the antisocial behaviour of the mindless minority will not be tolerated?

Tony Blair: Obviously, it is important that we keep the steady stream of investment going into my hon. Friend's constituency and elsewhere. He is right to say what a difference antisocial behaviour legislation has made, as I know from my visit a couple of days ago to Harlow, where I saw for myself how the local police and local community had used the antisocial behaviour legislation to make a real difference to their people's lives. That is why it is so sad that the Conservative party dismissed it as a gimmick.

David Cameron: Since our exchanges last week, plans for an alternative education White Paper have been published. Reports suggest—[Interruption.] It was not produced by the Liberal Democrats. I do not know—[Interruption.]

Mr. Speaker: Order. No one should shout down the Leader of the Opposition.

David Cameron: Thank you, Mr. Speaker. I simply wanted to clarify that the White Paper was not produced by the Liberal Democrats, who have been concentrating on their decapitation strategy.
	Reports suggest that the alternative White Paper calls for a delay in the introduction of trust schools. Will the Prime Minister specifically rule that out?

Tony Blair: Yes, I will.

David Cameron: Excellent. This is only my second outing. I was told that I would never get a straight answer from the Prime Minister, yet on my second outing, I have done so. We are already working well together.
	We are told that the alternative White Paper will propose cutting the power of head teachers, boosting the role of local education authorities, making it more difficult for new schools to be set up and putting the code of admissions into statute. The Secretary of State for Education and Skills said that that would undermine discretion and flexibility. Will not those changes render the Prime Minister's changes meaningless? So will he rule them out, too?

Tony Blair: I can assure the hon. Gentleman that we will stick with the changes in the White Paper because they are the right changes to make. There is a difference between me and those hon. Friends of mine who have put forward different proposals today. There is also a difference between me and the hon. Gentleman, because last week, he confirmed that he was in favour of bringing back academic selection—

David Cameron: No.

Tony Blair: The hon. Gentleman says no. Let me read to him what he said last week on the "Today" programme. Mr. Humphrys said:
	"there will be a return to selection by ability if that is what the schools want, just to be quite clear about that.
	DC:"—
	that is the hon. Gentleman—replied:
	"That's right".
	So I am not the only one giving straight answers.

David Cameron: The Prime Minister said in his answer that there was a difference between his view and the view of his Back Benchers. So he faces a choice: with our support, he can have the reforms that our schools need; or he can give in to the Labour party. Which is it to be? White Paper or white flag?

Tony Blair: The hon. Gentleman has spent hours practising that one. Yes, there is a difference with the Back Benchers on my side who have published their proposals today; that is absolutely true. But the point is that there is also a difference with the Conservative party. Let us just be quite clear what that difference is. The hon. Gentleman wants to return to academic selection—

David Cameron: indicated dissent.

Tony Blair: The hon. Gentleman continues to shake his head. I shall give him another quote. In the Evening Standard, he said:
	"I want to give academies—and, over time, all schools—the freedom to run their own admissions policy . . . Some schools will want to select by academic ability".
	So there is no doubt about this: he wants academic selection; I do not. I want fair funding and fair admissions, and I want the freedoms to be within that framework. Now, if he supports that, let's hear it.

Alasdair McDonnell: May I ask the Prime Minister a question about an item of national importance and public interest? Last week we saw the collapse of charges arising from the IRA spy ring in Stormont that brought down the devolved Assembly. We were told by the Attorney-General that those charges collapsed in the public interest. On the basis of that alleged public interest, of which absolutely no detail has been provided, would it be possible to make a statement or share some information with us on why the charges were preferred, lasted for three years, then suddenly evaporated at the last minute?

Tony Blair: I entirely understand my hon. Friend's concern. I have to say, however, that the decision whether to proceed with a prosecution is made by the Director of Public Prosecutions. It is not, and cannot be, made by Ministers. Obviously, we were not consulted about this matter; it has to be a decision taken by the independent prosecuting authorities.

Charles Kennedy: Last week, the Prime Minister acknowledged that he had been aware of the United States' policy of rendition for quite some time. If terrorist suspects are not being transported to a third country for the purposes of torture or mistreatment, will he explain to the House for what purpose they are being transported?

Tony Blair: First, let me again make it clear to the right hon. Gentleman that this Government are completely and totally opposed to torture or ill-treatment in any set of circumstances. Our country is a signatory to the United Nations convention against the use of torture, and we will continue to uphold its provisions absolutely. Rendition does not simply apply in those circumstances; it can apply in other circumstances, as the United States Secretary of State has made clear. To be fair, they have also said that they are totally opposed to the use of torture or ill-treatment in any circumstances.

Charles Kennedy: In welcoming precisely what the Prime Minister has just said, does he not therefore acknowledge that our country is surely under a legal and moral obligation to investigate why flights are being allowed to pass through our country for rendition purposes? Full inquiries are now taking place in Italy, Spain, Germany and Canada. Why are they not taking place in the United Kingdom?

Tony Blair: My right hon. Friend the Foreign Secretary has just passed me a copy of his parliamentary answer from, I think, a few days ago, which states:
	"Careful research by officials has been unable to identify any occasions since 11 September 2001, or earlier in the Bush Administration, when we received a request for permission by the United States for a rendition through UK territory or airspace, nor are we otherwise aware of such a case."
	On United States Government flights coming in and out, those take place for a whole series of reasons. We receive visits from people from the United States Government the entire time.—[Interruption.] I have to say that the Liberal Democrats are quite extraordinary sometimes. The idea that we should investigate every time that a United States Government plane flies into this country is completely absurd.

Linda Gilroy: What more is the Prime Minister prepared to do to help Plymouth police to ensure that drug barons and other hardened criminals are not able to profit from their ill-gotten gains?

Tony Blair: My hon. Friend raises a point on the action that we are taking against those engaged in organised crime. One of the most important powers that the police have is to be able to seize cash that drug dealers, or those suspected of drug dealing, may have on them. We want to lower the minimum amount that people must have on them before they can be subject to that procedure. We have recovered something like £185 million worth of criminal assets over the past three years. In Devon and Cornwall, which is my hon. Friend's area, the police have obtained cash forfeiture and confiscation orders with a value of more than £1 million just in the past year. We will also, however, give incentives to forces to do more of that confiscation work, and they will be able to keep a proportion of the money that they confiscate. Already, about an additional £180,000 has been paid into the funds of Devon and Cornwall as a result, and we want to extend that further. Again, however, I am sorry to say that the shadow Home Secretary opposed those measures when we announced them the other day.

Ian Paisley: Is the Prime Minister aware of the serious matter that has just been raised by the hon. Member for Belfast, South (Dr. McDonnell)? Does he realise that the people of Northern Ireland, in both sections of the community, are angry that a serious matter has taken place, and all that we receive from the Secretary of State for Northern Ireland is the response that no questions will be answered in Parliament? The Northern Ireland people have a right to be heard in this place, and the Prime Minister has a responsibility in this place in relation to the safety of many hundreds of people who were visited by the police and told that they were in danger and the £3 million that has been lost down the drain on the issue. Will he see that the rights of the people of Northern Ireland are defended, and that there will be some place where public representatives can ask those questions and get answers to them?

Tony Blair: I am certainly happy to see how much more information can be put in the public domain, consistent with the proper legal procedures. I hope that the right hon. Gentleman will accept from me, however, that the decision was not taken by any Minister, and neither was there any political interference in that decision. The decision to prosecute is taken by the DPP, and he has decided not to proceed with it. I do not know the reasons for that; I simply know that that is what he has decided. I will, however, examine whether, consistent with the proper legal procedures, we are able to give more information, but the decision was taken solely on the authority of the prosecuting authorities.

Andrew Love: Will my right hon. Friend join me in condemning Conservative-controlled Enfield council, which only last week turned down £1 million of economic development assistance because it refused to match-fund that sum? That will affect the most disadvantaged and deprived parts of my community. Is not all this talk about concerned conservatism simply hot air? Sadly, the reality is that it is still the uncaring and nasty party that we all know.

Tony Blair: If it is not out of order in this new era of an end to Punch-and-Judy politics, I suggest to my hon. Friend that it looks to me as though the Conservatives have been a trifle misguided on the issue. Let us put it no higher than that.
	My hon. Friend has rightly drawn attention to the fact that the only difference between compassionate conservatism and conservatism is that under compassionate conservatism they tell you that they are not going to help you, but they are really sorry about it.

David Cameron: Expanding free trade is the most powerful force for the reduction of world poverty, but there are some at the world trade talks in Hong Kong this week who argue that expanding free trade means forbidding developing countries to protect their environments. Does the Prime Minister agree that that is the wrong argument? Does he agree that it is perfectly possible for developing countries to have free trade and benefit from it, while allowing the environmental protections that we enjoy in this country?

Tony Blair: Yes, I do agree with that, but there is another thing that I consider important. It is also important for developing countries whose economies are at a very low stage of development to get help—aid for trade—so that they can build the capacity that will enable them to trade. I was particularly pleased that the G7 Finance Ministers agreed to increase aid for trade to $4 billion, because that trade capability is also an important part of making free trade work.

David Cameron: The difficulty of this week's talks demonstrates how important it is for the developed world to show real moral leadership. Does the Prime Minister agree that the developed world should show that leadership not by imposing damaging conditions on developing countries, but by taking the first step, and reducing its own tariff barriers?

Tony Blair: I agree that we should reduce our tariff barriers. That is what we have asked for all along. It is important to recognise that the issue involves not just Europe, but America and Japan. We also want non-agricultural market access to be provided by Brazil, India and other parts of the developing world that are well on the way to becoming developed.
	I believe that if we show the right imagination at Hong Kong and afterwards, we will get the right deal for this Doha development round, and I believe—as I have said on many occasions—that if we do not it will be a disaster, and not just for the developing world. Countries like our own stand to benefit enormously from opening up free trade.

Anne Snelgrove: Will my right hon. Friend join me in congratulating Swindon borough council on achieving a two-star ranking? Does he recognise the significant contribution made to its success by Government remedial help, particularly from the Office of the Deputy Prime Minister? We thank the ODPM for its help over the past few years. Will my right hon. Friend assure me that that help will be available to struggling councils throughout the country in future?

Tony Blair: I am happy to pay tribute to the Department of my right hon. Friend the Deputy Prime Minister, and to Swindon borough council for the excellent work that it is doing. It shows that with the right level of investment and funding, and partnership between local and central Government, a real difference can be made to the quality of life of local communities.

Peter Robinson: May I return the Prime Minister to the issue of the Stormont spy ring? He says that the decision was made by the Director of Public Prosecutions. Can he say whether the DPP sought or received advice from the Attorney-General, or whether there was any consultation with any other Minister?
	Is the Prime Minister aware that three possible reasons for the DPP's decision are being canvassed in Northern Ireland? One is that there was not enough evidence to secure a prosecution; another is that the Government have done a deal with the Provisional IRA; and the third is that they were protecting sensitive, if not embarrassing, evidence and agents. Will the Prime Minister tell us which it was?

Tony Blair: I do not know whether the DPP was in consultation with the Attorney-General or not, but I can assure the hon. Gentleman that no Minister had anything whatever to do with the decision. I hope he accepts that. If he actually wants to create a stable atmosphere in Northern Ireland, he should bear in mind that it is helpful not to end up with conspiracy theories that owe very little to the facts and a great deal to the desire of people to stir up difficulty.
	As for the three points that the hon. Gentleman presented as reasons for the action, I cannot comment on the first or the third, but I can say of the second that it is completely untrue.

Lindsay Hoyle: Does my right hon. Friend share my anger and concern at the fake photographs published in the Daily Mirror that put British service personnel's lives at risk? And yet, we find that nobody is guilty and nobody is going to be charged in court; the whole thing seems to have been swept under the carpet. What can he do to put this matter right and to restore some credibility to the British justice system?

Tony Blair: I have to say to my hon. Friend that I entirely understand the concern—and, indeed, the anger—in certain quarters, but again, these decisions have to be taken by the prosecuting authorities. I think that I would quite rightly be subject to a great deal of criticism if I sought to intervene in those decisions.

Greg Clark: Last week, the National Audit Office, the permanent secretary of the Department for Work and Pensions and the Treasury's own officer of accounts all told the Public Accounts Committee that
	"The complexity of the benefits system . . . has deterred saving for retirement".
	The only people who disagree with that are the Chancellor and the hon. Member for Normanton (Ed Balls). Are they right or is everyone else correct?

Tony Blair: We are all agreed that there is a need for pensions reform, which is precisely the reason why we commissioned the Turner report. When we put forward our proposals next year, I hope that they will get support in every part of the House.

John Grogan: Will the Prime Minister consider, as a well-deserved Christmas present to Labour Back Benchers, giving us a free vote on smoking, particularly as much of the pub and hospitality industry now supports a complete ban?

Tony Blair: I take it from the fact that my hon. Friend says that it is well deserved that he is going to be fully supportive of the Government in all the Divisions to come in the next few months. I said what I said on smoking last week, and we will continue, obviously, to talk to people about it, but I would point out that, on any basis, the vast bulk of smoking in public places is going to be banned under this legislation. I am aware that a debate continues as to whether we should go even further, and I shall listen to that debate with interest.

Vincent Cable: Is the Prime Minister aware that 97 per cent. of executions in the world take place in China, Vietnam, Iran and George Bush's United States, which passed the 1,000 mark this week? Since this is an area in which the European Union has considerable moral and political authority, what role is the Prime Minister playing, as EU President, in exercising international leadership to curb this practice?

Tony Blair: There is a difference between Europe and America on this issue—there always has been and there will be so long as the death penalty remains in the United States of America. When the hon. Gentleman puts the United States of America alongside China, Iran and so on, it is worth pointing out to him that the rule of law applies in the United States of America. Although I strongly disagree with the death penalty, I think that, if we are looking at human rights abuses, it is sometimes right to look elsewhere and at the severe human rights abuses that happen around the rest of the world, particularly in countries such as North Korea, where we never hear any protests at all.

David Clelland: The Prime Minister will recall the jubilation last year when the Chancellor announced that from April next year, pensioners and the disabled would receive free bus travel. But is he aware that there have been unintended consequences for Tyne and Wear, where there is a £7.3 million shortfall between the cost of running the scheme and the money being provided through the revenue support grant? If, at our meeting with the relevant Minister next week, we are unable to resolve this problem, will the Prime Minister agree to meet Tyne and Wear MPs to see whether he can find a way through this situation?

Tony Blair: I would be very happy to meet my hon. Friend and his colleagues. I know that he has a meeting with that Minister next week, and I hope that the situation can be resolved.

Nigel Waterson: Before he leaves politics, will the Prime Minister tackle the problems in the NHS, especially in my constituency, where there are massive deficits, the worst bed blocking in the whole country and people are being turned away from out-patients? Now, moreover, there is a proposal to close obstetrics and gynaecology.

Tony Blair: First, let us be clear that overall in the national health service—[Interruption.] I will come to the hon. Gentleman's constituency in a moment. Let us be clear that overall, as well as record investment, we have had waiting lists down somewhere in the region of 400,000 since 1997. There has been a transformation in the position regarding cancer treatment, cardiac care, cataracts and many other diseases. At the same time as we draw attention to the problems that our health care system faces, it is essential that we recognise the huge progress that has been made.
	It is true that there are deficits in the hon. Gentleman's area, but that is despite record funding being put in. I have to say that part of the responsibility for the problem must lie with local management, who have to make sure that they keep within their budget. Let me point out to the hon. Gentleman that, in his area, there are almost 3,000 more nurses, almost 400 more consultants and almost 300 more GPs. I agree that there are real issues that we and his local health authority have to resolve, but that takes place within the context of massive improvement since 1997.

Michael Connarty: Did my right hon. Friend share my pleasure in seeing the national minimum wage rise to above £5 in October this year? He will recall that I drew his attention to what I believe is an error in regulation 31(1)(e), which allows tips in restaurants to be counted towards the minimum wage. Will the Prime Minister give the people in the hospitality industry a Christmas present and bring forward a simple amendment to ensure that all tips and gratuities paid in restaurants cannot be counted towards the minimum wage?

Tony Blair: It is not me who would be giving them that Christmas present, and we obviously have to be careful about the impact on business. I know that the Low Pay Commission will look into the issue carefully—it has been a longstanding grievance—but it has to be done in a way that also protects people's jobs and business.

Mr. Speaker: I call Sir Peter Tapsell.

Hon. Members: Hooray!

Peter Tapsell: As the Liberal leader knows, the louder the cheer, the greater the danger.
	Why has the Prime Minister still not gone to Congress in Washington to collect the gold medal that he was awarded more than two years ago for his great help in persuading public opinion in the United States and Britain to support the invasion of Iraq?

Tony Blair: Because I have one or two other things to do at the moment. I have to say that I do not in any shape or form regret having supported the action we took. Today and this week is a particularly good time to remind ourselves that this week there will be the first ever democratic election in Iraq in which its people will be able to choose their Government for the first time ever. Alongside our alliance with the United States, that is something of which I am very proud.

Lynne Jones: It would, I accept, be ridiculous to check all flights between the US and this country, but would it not be reasonable to check all flights between the US and countries with poor human rights records that happen to stop down briefly in this country?

Tony Blair: I think that my right hon. Friend the Foreign Secretary went through these issues in considerable detail the other day and, indeed, again yesterday, and I am sure that he will continue to do so. We have set out the position very clearly in respect of this country, and American Secretary of State Condi Rice has set out the position clearly in respect of the United States. Let me emphasise again that we do not support any illegal activity or, more particularly, the torture of people in detention. This country has never supported that and never will.

Hugo Swire: Given the retiring Prime Minister's personal and positive support for London 2012, why is his Chancellor and potential successor blocking plans to give our elite athletes the £45 million a year that they need to raise us in the Olympic medal stakes from 10th to fourth place—a move described by the British Olympic Association as being "devastating" for British sport?

Tony Blair: The British Olympic Association and everyone else connected with the games will make numerous requests for money over the coming years. I assure the hon. Gentleman that not only are we very proud to have won the 2012 bid, but that we will fund it properly, as the Government should. The amount of money that we will put in will be significant and considerable, and the Treasury is absolutely right to make sure that every penny spent is properly accounted for.

Sadiq Khan: Will my right hon. Friend tell the House about the progress that we have made in the middle east peace process during the UK's presidency of the EU?

Tony Blair: It is worth pointing out that, as a result of the EU's engagement with the Quartet—Russia, America, the UN and the EU—we will have the first proper elections to the Palestinian Authority. They will be followed by elections in Israel, and we have also had the disengagement from Gaza and parts of the west bank. If the two elections in the Palestinian Authority and Israel go well, there is every chance that we will make a significant breakthrough on the middle east. I certainly hope that we can.

Paul Rowen: Will the Prime Minister explain why the Government have decided against holding a public inquiry into the events leading up to 7/7? Does he accept that, for the victims and their families, that is the only right way forward?

Tony Blair: I do accept that people want to know exactly what happened, and we will make sure that they do. There will be some five different Select Committee inquiries into the matter. We will bring together all the evidence that we have and publish it, so that people—the victims and others—can see exactly what happened. However, we know essentially what happened on 7 July, and I really believe that a full-scale public inquiry would divert a massive amount of police and security service time. I do not think that that would be sensible. I totally understand the concerns about this matter, but I hope that people will be satisfied with the large number of Select Committee inquiries, and with the fact that we will publish a full account of all the information that we have.

Housing Development (Infrastructure Requirements)

Mark Hoban: I beg to move,
	That leave be given to bring in a Bill to require local authorities and the Government to agree on the infrastructure to be provided for large scale housing developments; and to determine the allocation of costs in advance of the commencement of building work.
	The general practitioner's surgery in Whiteley in my constituency is still housed in a portakabin. The primary school serving that community is too small, so five and six-year-olds turned away from it are bussed to another school on the other side of a busy motorway junction. There is only one road in and out of Whiteley.
	Residents living in the 3,000 homes in Whiteley see for themselves what happens when large-scale housing development takes place without adequate infrastructure. Thankfully, a new GP's surgery and a one-form-entry primary school will be built shortly, but more needs to be done to tackle the community's traffic problems.
	The quality of life for Whiteley residents would be much better if the infrastructure issues had been tackled up front, rather than on a piecemeal basis. After what has happened in Whiteley, it is clear to me that we cannot embark on large-scale building without looking again at how infrastructure development is provided.
	In addition, we need to address the concerns of residents, who are anxious that existing services cannot cope with the demands and pressures that come from large-scale house building. When faced with development, it is a natural reaction for people to look at the congestion on their roads, at the queues at their GPs' surgeries and at the problems of getting their children into local schools, and to challenge those plans. They also start to question the willingness of the Government to pay their share of the bill for tackling some of those issues.
	In south Hampshire, one of the challenges that we face relates to the transport infrastructure. The main route that links Portsmouth and Southampton—the M27—is struggling with increased demand. The A32 between Fareham and Gosport is already heavily congested. Hampshire county council and Portsmouth city council worked together to design a light rapid transit system to link Fareham, Gosport and Portsmouth, to tackle the growing traffic problems that arise from existing and planned development. Two weeks ago, the Government rejected those plans as being too expensive, but they did not say that fewer houses should be built or that development plans should be put on hold until an alternative transport solution is agreed.
	The rejection of the rapid transit system is illustrative—as, indeed, is the delay in getting an extra primary school for Whiteley—of the problems of failing to tackle the infrastructure needs of development at the outset, rather than waiting until a problem emerges to tackle. If the resolution of the issues is delayed, developers' contributions run out, even if they were ever adequate to tackle the infrastructure needs, and other priorities for expenditure become more pressing.
	We need to learn from those experiences, when looking at the plans that are being put together at the moment by regional assemblies, and to take a fresh look at infrastructure provision and its funding. If we are to meet the needs of new residents and address the concerns of local people, we need to tackle infrastructure in a new way. We cannot simply allow decisions about infrastructure to be taken once houses are built.
	We can forecast what issues will arise from large-scale housing development, and we should plan how to tackle them now, rather than simply waiting for them to happen and trying to find a solution then. By infrastructure, I do not simply mean the estate roads around new developments and shops, but the major infrastructure investment that is needed to fund large-scale development in areas such as south Hampshire, where the plan is to build 80,000 houses over 20 years, 20,000 of which will be in two strategic development areas, one of which is in my constituency.
	If we are to proceed with development on that scale in Hampshire and on a greater scale in the Thames Gateway, Buckinghamshire, Bedford, Essex, Kent, Hertfordshire, Milton Keynes, Northamptonshire and elsewhere, there must be a serious commitment to infrastructure investment.
	My Bill proposes three steps to tackle the infrastructure problems. The Government and the local authority should work together to identify the infrastructure needs related to large-scale housing development. Those needs should be costed. Agreement should be reached about who foots the bill before development can start. Those steps need to be completed, not when it is too late—not when schools are overcrowded, roads are clogged up and water and drainage systems are overloaded—but before work starts, so that local authorities know what support is there and local people understand what the solutions to those issues will be, so that everyone involved in the development knows what their share of the bill is.
	The partnership for urban south Hampshire has already started to assess the infrastructure needs and costs associated with the 80,000 new homes that are planned for the area and recognises, too, the need for measures to tackle the existing infrastructure deficit. It has estimated that the cost of tackling the existing infrastructure problems and meeting future needs that relate to transport alone is £1.6 billion, before taking into account the other needs of those new developments. It estimates that new primary schools will cost about £80 million and that secondary schools will cost a similar amount.
	We will need one GP per 1,800 to 2,500 people. The capital cost associated with a new surgery is about £500,000 per GP. We will need new primary care facilities, enhanced water supplies, new or extended sewage treatment services and community centres. The list is long and is not exclusive to south Hampshire—other areas will need the same facilities—but the crucial issue, once the level of need is identified, is who should pay for it?
	The partnership for urban south Hampshire estimates that each house in the strategic development area will generate developers' contributions of £10,000. So an SDA of the size planned for Fareham will produce £100 million. That sounds a lot, but let us remember that a secondary school can cost about £20 million, so it will not take too long for those contributions to become exhausted. So the cost of infrastructure must be met from elsewhere—whether from council tax payers in the area or from taxpayers.
	The Office of the Deputy Prime Minister has recognised the cost of infrastructure and has set up the community infrastructure fund, but there is only £200 million in that pot—not enough for south Hampshire, let alone areas elsewhere in the country. The position is complicated by the allocation of resources across government. Will the Department for Transport be prepared to pay its share of the bill for road, rail and public transport improvements? Our experience of the rapid transit system is that while one arm of the Government—the Office of the Deputy Prime Minister—is urging us to build more houses, another arm is not prepared to meet the cost of tackling the traffic congestion that housing development has created.
	If the Government want new houses built, priorities need to be realigned across existing Departments, so that funds are available in the Department for Education and Skills, the Department of Health and the Department for Transport to meet the cost of infrastructure provision. This is not a plea for more money to be spent, but an argument that existing resources be directed at tackling the issues that will arise from housing development. I hope that the cross-cutting review announced in the pre-Budget report will help in the provision of infrastructure in the areas most affected by new developments.
	The essential lock in the process is the requirement that the needs are assessed and agreed, and that before work starts the Government and local authorities decide who picks up the bill. As the people of Whiteley know, it is all too easy to put off those decisions until the housing is built. Other priorities become more pressing and urgent, and it is all the harder to tackle existing problems.
	If the Government want more houses to be built, they need to play their part by ensuring that the money is available to provide the roads, schools, public transport and GP surgeries that an expanding population needs. If they are not prepared to meet their share of the bill, they should not be forcing councils to allow more and more houses to be built, putting a greater and greater strain on an infrastructure originally designed to meet the needs of a much smaller population.
	I ask Members on both sides of the House to recognise the important issues that arise from housing development and to see the Bill, and the principles it sets out for reaching an agreement on infrastructure needs and costs and payment before work starts, as an essential way of guaranteeing for our constituents a means of securing the services that they need. I commend the Bill to the House.
	Question put and agreed to.
	Bill ordered to be brought in by Mr. Mark Hoban, Mr. Mark Prisk, Mr. David Lidington, Andrew Selous, Mr. Brian Binley, Mr. Mark Francois, Mrs. Maria Miller, Mr. Mark Lancaster, Mr. David Gauke and Peter Viggers.

Housing Development (Infrastructure Requirements)

Mr. Hoban accordingly presented a Bill to require local authorities and the Government to agree on the infrastructure to be provided for large scale housing developments; and to determine the allocation of costs in advance of the commencement of building work: And the same was read the First time; and ordered to be read a Second time on Friday 12 May, and to be printed [Bill 104].

European Affairs

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Watts.]

Jack Straw: The debate is about prospects for the European Council, but I begin by welcoming back to the Opposition Front Bench the right hon. Member for Richmond, Yorks (Mr. Hague). We remember some excellent parliamentary performances from him—if I may say that, at the risk of damaging his reputation—from the Front Bench, when he was Leader of the Opposition, and some fine speeches from the Back Benches over the past four years, including a notable one on Iraq and a notable but less noticed one in our last debate, in June, on prospects for the European Council.
	Having seen 10 Leaders of the Opposition during my time in this place, I am in no doubt of the truth of the old saw that it is the worst job in British politics—[Laughter.] I am glad that the right hon. Gentleman agrees. I hope that it is of some comfort to him when I say that, in my judgment, being shadow Foreign Secretary is probably one of the best jobs in British politics: many trips abroad and few decisions.
	As an avid reader of the Darlington and Stockton Times, I noticed how long the right hon. Gentleman has been prepared for his role. From my researches, I saw that in the issue for December 1988 he said:
	"I believe that knowing what is going on in the world is a vital qualification for political office."
	That is indeed true and only a few months later he was elected for Richmond.
	Most of us remember with great affection the right hon. Gentleman's clarion call at the last election, "Two days to save the pound". I am deeply grateful to him for that call, because my electors heeded it; they voted for me and the pound has indeed been saved—[Hon. Members: "Ah."]—as long as the five tests remain unfulfilled. I am pleased to say that whatever else we are talking about tomorrow and on Friday, and perhaps Saturday and Sunday, or Monday, we are not discussing the euro at the European Council.
	Tomorrow and Friday, European Heads of State and Government and Foreign Ministers meet in Brussels for the December summit. The agenda is wide, covering many aspects of the UK's presidency. I will deal briefly with these items towards the end of my speech, but the Council will be dominated by negotiations on the EU budget, so let me come to that first.
	The House will recall that six months ago, five nations, including the United Kingdom, had to veto budget proposals that were put forward by the then Luxembourg presidency. We took over the presidency 10 days later and since then we have consulted widely about the changes needed to the budget. Last Monday—5 December—we formally published our own proposals.
	In summary, our proposals put forward a budget set at €847 billion for the seven-year budget period of 2007–13, which is 1.03 per cent. of the national incomes of member states. That compares with the 1.06 per cent., or €870 billion, Luxembourg proposal, and the massive 1.24 per cent., or €1,025 billion, Commission proposal. Under our proposals, Britain's net contribution would be an estimated €58 billion over the seven years of the budget. The rebate would rise from an annual average in the current budget period of €5 billion to an annual average of €7 billion, but it would be around €1 billion less a year than its default setting so that we would make a fair contribution to the costs of enlargement. I will deal with that in more detail shortly.
	Since the publication of the proposals last week, there has been an intensive round of formal and informal discussions. For the convenience of the House in the debate, I published earlier today a written ministerial statement outlining revised proposals following those discussions. Full details have been in the Vote Office since 11 am.

Nick Palmer: I apologise in advance for the fact that I will be unable to stay to hear all my right hon. Friend's remarks, although I hope to return later. Does he accept that while the great majority of hon. Members support the Government's position that we should not give up our existing rebate until substantial changes are made to the common agricultural policy, most of us—on this side of the House, at least—would not want Britain to rip off the poorer countries that have just joined by insisting on every pound of flesh that we can get out of them as well?

Jack Straw: My hon. Friend's view is implicit in the support of hon. Members on both sides of the House for enlargement over many years.
	Budget negotiations have never been easy. The equivalent European Council seven years ago failed to reach an agreement. We in the UK are working extremely hard for a deal this time, but I believe that no deal is preferable to a bad one. The negotiations are especially complex this time for three reasons: the impact on the budget of the massive enlargement of the EU that took place last May; the consequences of any budget changes on the UK rebate; and the need for fundamental long-term reform of EU policies and spending priorities. Let me deal with each of those in turn.
	First, I will address enlargement. Two months ago, on 3 October, the European Union took the historic decision to open negotiations for accession with its nearest and largest Muslim neighbour, Turkey. When I came to report that to the House a week later, I was struck by the way in which the decision was welcomed across the political spectrum. Such an all-party approach to Turkey's membership of the European Union represents something of a long-standing and happy paradox about Britain's relationship with Europe. While the question of our overall relationship with the European Union has often been highly divisive, both among and within parties, enlargement of the Union has always been the subject of a strong and positive consensus. We have all recognised that one of the best ways to further the security and prosperity of the United Kingdom is to ensure that there is an ever-widening circle in Europe of open democracies and thriving economies.

Louise Ellman: My right hon. Friend is apparently considering the accession of Bulgaria to the European Union. Does he consider that the state of Bulgaria's judicial system, as shown in the treatment of Michael Shields, makes it an appropriate candidate for agreement to accession at this time?

Jack Straw: Ultimately, the judgment on whether Bulgaria is fully ready for accession will take place at the end of this year or on 1 January 2007, or subsequently. It is a judgment that will have to be made by the European Union as a whole on the basis of recommendations by the Commission. The Commission has raised reservations about the quality of Bulgaria's justice system. My hon. Friend spoke powerfully during the Report stage of the European Union (Accessions) Bill of her concerns about Bulgaria's justice system, as illustrated, in her view, by the treatment of Michael Shields. As my right hon. Friend the Minister for Europe told my hon. Friend, we are making, and will continue to make, strong representations to the Government of Bulgaria. I have done so myself, both to the Foreign Minister and to the Prime Minister, and I stand ready to do so again.
	We have actively pushed enlargement since taking office in 1997. To the great credit of the Opposition, it was the previous Conservative Administration who prodded and prompted the EU to enter into association agreements with each of the eastern European applicant states to prepare them for membership. In 1995, the then Prime Minister, John Major, described enlargement as
	"the most important task facing the European Union".—[Official Report, 18 December 1995; Vol. 268, c. 1222.]
	Two years later, the right hon. Member for Richmond, Yorks, when Leader of the Opposition, promised the Government his "full support" for this "long-standing", "British objective", which has been regularly repeated from the Opposition Front Bench ever since.
	More than that, the Conservative party has understood the need to back up words with action. John Major's Administration, in the early 1990s, spent hundreds of millions of pounds, quite rightly, via the know-how-fund, on the reconstruction and regeneration of eastern Europe.
	When, two years ago, we debated the accession Bills which brought the 10 new states into EU membership, the then shadow Foreign Secretary, the right hon. and learned Member for Devizes (Mr. Ancram), was very clear on the need to invest on enlargement. He said:
	"Successful enlargement will require commitment and courage from the applicant countries as well as those who are already members."—[Official Report, 21 May 2003, Vol. 405, c. 1036.]
	He also said, quite rightly:
	"Countries such as Poland are crying out for investment in their infrastructure, and wise use of structural funds could be crucial in helping their economies to prosper."—[Official Report, 5 June 2003, Vol. 406, c. 372.]
	So I believe that there is unity across the parties about the policy of enlargement, and about the need for us to help pay for it. That means helping to build up the economic and social infrastructure of these east and central European societies, so long neglected under Soviet control. It also means constructing better roads, railways and industrial estates, regenerating run-down areas, developing the social housing stock, and so on. That sort of investment directly benefits us too.

Mark Prisk: Last Tuesday, I attended the summit of the European Union's small business organisations here at the Palace of Westminster. At that meeting I was struck by the overwhelming view of the small businesses of the new entrants to the EU that under the British presidency of the EU the Lisbon agenda has not progressed one whit. What has gone wrong?

Jack Straw: I do not accept that for a second.
	First, just yesterday, we were able to gain political agreement in the European Council on the chemicals directive, which could have affected very adversely small and large businesses alike throughout Europe in the chemicals industry, including many British businesses. We now have unanimous agreement on what is called REACH—the chemicals directive—which will ensure higher environmental standards without damaging British business.
	Secondly, we in the United Kingdom have led what has been called the four presidency engagement to secure deregulation across the Union. The result of that is tangible: at long last the Commission has grasped this agenda—like turning round a tanker. Commissioner Günter Verheugen, who is in charge of deregulation, announced at a conference in Edinburgh not long ago that 68 key sets of regulations would be turned back, and that many others will be revised. In addition, with the Netherlands, we co-chaired a meeting on rolling back the powers of the EU centrally so that much more power was delegated and devolved to individual member states.
	Yes, progress on Lisbon has been frustrating for all parties and for all Governments who are committed to seeing an open economy in Europe. That has been because of the difficulties faced by some Governments—not the United Kingdom and not some others—who failed to take account of the fact that the world is changing. We are now subject to serious open competition from countries such as India and China, and the EU must change, or it will not survive. We have done a great deal on that.

Keith Vaz: Do not all the reports indicate that Britain has done better on the five-year plan set out in the Lisbon agenda than other EU countries? Under our presidency there has been progress, but will my right hon. Friend assure the House that when our presidency has ended we will push that agenda forward so that other European countries and the Commission are able to co-operate in order to reach the rest of the benchmarks?

Jack Straw: My hon. Friend talks simply about progress within the United Kingdom. We have done extremely well and met almost all the Lisbon targets. The problem has been other EU member states.
	I return to the issue of enlargement. The budget that we have tabled proposes that, given the need to pay towards the cost of enlargement, the EU spends about €150 billion on structural and cohesion fund projects in the new member accession states. That is a very significant increase—more than five times the support that they have been receiving up to now. Because relative prosperity and priorities have changed, there is a corresponding and significant drop in structural and cohesion fund receipts for every western European member state. Amounts and proportions vary, but, for example, Spain will receive just over half in the next financial perspective of what it received last time and Ireland will receive less than a quarter.
	Significantly, even if there were no change in any of the budget arrangements, our net contribution would stand to rise by €11 billion from €39 billion in the current financial perspective to €50 billion in 2007–13, mainly because of enlargement. I have heard no one from any party in the House say that it should not stand to rise. I therefore suggest that the question before the House is not whether we should pay a fair contribution towards enlargement, but what that contribution should be.
	As part of its recommended budget, the Luxembourg presidency proposed back in June that our contribution should rise by €36 billion, or 93 per cent., from €39 billion in this financial perspective to €75 billion—€25 billion above that default setting of €50 billion. We told the Luxembourg presidency emphatically that that was totally unacceptable.
	Under our proposals, we have proposed a total net contribution of €58 billion—an increase of €8 billion above the €50 billion floor. We judge that to be a fair contribution. Were we not to make an offer of such magnitude, our contribution would not fairly reflect our position as one of the most prosperous nations in the EU. On the other hand, countries such as the Netherlands, Sweden and Germany would be making contributions way out of line with their prosperity, and that would not be fair either.

Danny Alexander: The Foreign Secretary will undoubtedly be aware that many regions in the United Kingdom, such as the highlands and islands, for example, have benefited greatly from EU structural funding. I am grateful to see in the latest budget proposals that the Government have given up on proposals for repatriating European funds entirely to countries such as the United Kingdom. Will the right hon. Gentleman assure the House that structural funding for regions such as the highlands and islands will not be negotiated away in the small hours during the final round of talks, and that we can be sure that such places will continue to benefit substantially from EU structural funding into the future?

Jack Straw: My right hon. Friend the Chancellor set out in—I think—December 2003 his approach and our approach towards structural and cohesion funding in the new financial perspective. I do not know whether a deal will be struck tomorrow, the next day or the next. I cannot say precisely what its conditions will be. I can say that the area for negotiation is narrow. Of course we take account of the needs of regions such as the highlands and islands, which will continue, or should continue, to qualify for structural and cohesion funds. The hon. Gentleman will excuse me if I do not give him an exact guarantee at the moment, because that would be to anticipate the negotiations.

Charles Walker: I thank the Secretary of State for giving away. [Laughter.] I am sorry, I meant giving way. Giving up all or part of our rebate causes my constituents a great deal of concern. It is difficult to sell it to them as a positive, bearing in mind that they face the closure of their accident and emergency department because of a £16 million shortfall in funding. They would much rather that some, if not all, of the money that is to be given up remained in the UK to be invested in the health service.

Jack Straw: I apologise to the hon. Gentleman, as his constituency does not spring immediately to mind.

Charles Walker: It is Broxbourne.

Jack Straw: Indeed. The hon. Gentleman's party has long supported enlargement, and Conservative Front and Back Benchers have called for money to be put into structural and cohesion funds for eastern European countries. That money must come from somewhere, and it can only come from the more prosperous western European member states.

Graham Brady: It should be taken from funds for the common agricultural policy.

Jack Straw: We have sought to reform the CAP, and we have done a great deal more than the previous Government did under John Major and Margaret Thatcher, when there was virtually no reform year after year. We want more reform, but I do not believe that the Poles, Czechs and Hungarians should be punished for the obduracy of a number of western European member states that have benefited unjustifiably from the CAP.
	People in my constituency, which is not very different from Broxbourne, have benefited directly from the money that we have already put into structural and cohesion fund projects in, for example, Ireland and Spain. In the 15 years from 1988 to 2003, we contributed about £500 million towards structural cohesion fund projects in those two member states. In return, there has been a £27 billion annual increase in trade with those countries, which has certainly benefited firms in my constituency and, I suggest, in Broxbourne. We are not beggaring ourselves by offering that money—we are helping ourselves directly. Building up the economies of eastern Europe provides economic benefits and increases the political stability and the overall happiness of those societies.

William Cash: rose—

Elfyn Llwyd: rose—

Jack Straw: I always give way to the hon. Member for Stone (Mr. Cash), but first I shall give way to the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd).

Elfyn Llwyd: I fully accept the logic that the more prosperous states should assist the newcomers, but I remind the right hon. Gentleman that west Wales and the valleys, which constitute a large part of Wales, benefit from objective 1 status. Will he assure the House that whatever deal is struck—hopefully in the next three days—will not affect the amount of assistance that is available, as the gross domestic product of west Wales and the valleys is still, unfortunately, less than 75 per cent. of the average EU GDP?

Jack Straw: I accept the point that the hon. Gentleman makes. My hon. Friend the Minister for the Middle East will provide more details for him and the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander). We are conscious of the needs of areas such as west Wales, the highland and islands and Cornwall, which qualify for objective 1 status, and we want to ensure that, as far as possible, they are protected.

William Cash: After the rejection of the European constitution by France and Holland there was a period that was described as a "pause for reflection". That was about six months ago. Have the Government been reflecting, and why have we not heard anything in today's debate about the fact that the constitution is dead but certainly not buried? Exactly how does the right hon. Gentleman respond to the recent statement by the German Chancellor that her coalition would reintroduce the constitution in the first months of the German presidency, which starts at the beginning of 2007? [Interruption.]

Jack Straw: Yes, I shall take my time, and reflect on my reply.
	The blunt truth is that we have had rather more important things to do in the real world than try to revive the constitution. If the hon. Gentleman has abandoned the habits of a lifetime to suggest that he wants the document to be revived, I will listen carefully.

William Cash: I want to know what the right hon. Gentleman thinks.

Jack Straw: I have just explained what I think. The hon. Gentleman knows what I think anyway, so I am not entirely sure why he asked the question. Chancellor Merkel is the new leader of the centre right party in Germany, just as there is a new leader of the British Conservative party which, apparently, is a centre right party, although I shall come to that later. New leaders say new and interesting things, and perhaps it would be appropriate to have a period of reflection to consider them.

Mark Francois: The Foreign Secretary intimated that Britain may be prepared to give up about £1 billion a year of anticipated income from the rebate to try to achieve a deal later this week. Will he confirm that that is not included in the pre-Budget report figures that were published by the Chancellor on 5 December—so there would be a hole of £6 billion if that money were subsequently given up?

Jack Straw: I think that the hon. Gentleman is correct to say—[Interruption.] Well, the figures could not have been included, because they have not been decided yet. In a column in the world's most important newspaper, the Lancashire Evening Telegraph, which I hope Members read, because it is even more important than the Darlington and Stockton Times—

William Hague: Surely not.

Jack Straw: That is our first disagreement.
	In a column to be published tomorrow morning, I have told my constituents that if they are thinking about putting a bet on the outcome of the negotiations tomorrow and Friday they should place it on a horse instead, as I am not predicting the outcome. The pre-Budget report necessarily includes firm estimates of firm commitments, and the Chancellor will naturally seek to adjust it in the light of any negotiations that are concluded.

David Drew: rose—

Jack Straw: If my hon. Friend will allow me, I should like to make some progress before giving way.
	The rebate was designed to deal with the unfair treatment of western European states of comparable prosperity. It was never intended to be a means of redirecting money from much poorer states to the United Kingdom. Indeed, in the early 1980s, when the rebate was negotiated, there was no serious expectation that the European Union could or would expand eastwards into the Soviet empire. I have been unable to find any occasion on which an hon. Member on either side of the House said that the new and poorer accession states should pay, directly or indirectly, the rebate in full. In any event, as I have already told the House, the rebate will rise from an average of €5 billion per annum in this period to €7 billion per annum in the next. It cannot therefore be said that we are giving it up. Our offer on enlargement involves a reduction of about €1 billion per annum in what the rebate would otherwise be. However, the rebate remains on every penny and cent of spending on the common agricultural policy anywhere in the 25 member states of the European Union, and on all spending in the 15 western European states.
	When Baroness Thatcher made her statement on the Fontainebleau summit in 1984, you and I will remember, Mr. Speaker, because we were both in the House, that it did not quite receive the rapturous reception that is now written up for it. I asked the right hon. Lady why she had failed in her stated intention of achieving a broad balance between the United Kingdom's contributions and the amount that we got back. I pointed out that in the following year, and the year after, despite the rebates, Britain's net contribution would be more than it had been in the previous three years.
	As it turned out, I underestimated the scale of the problem that Mrs. Thatcher was describing, for over the following 20 years the United Kingdom paid—after the rebate—twice as much net into the European Union compared with similar sized economies such as those of France and Italy. Under our proposals, we will for the first time achieve broad parity. For the first time in the 30 years of our membership and for the first time in the   21 years since the rebate was agreed, we will be making a net contribution broadly equivalent to those of France and Italy.
	Mrs. Thatcher was unsuccessful in another respect too: she did not constrain the growth of the European Union's budget as a share of the European Union's economy. Under successive Conservative Administrations, it rose by 50 per cent. It is this Government who have led the way to budget discipline—an average of 1.03 per cent. of gross national income over the next financial period and falling to below 1 per cent. on a commitments basis by 2013. Finally, the previous Administration failed to sustain reforms which dealt with the inequalities underlying the rebate—the imbalances of their spending on the common agricultural policy.
	That leads me briefly to my third point: the case that we are making for reform. Reform in the European Union is necessary if the Union and its member states are to compete effectively in a world economy that has changed beyond recognition over the past 20 years. We are pushing for parallel reforms in the World Trade Organisation negotiations, which got under way yesterday. We are proposing in our budget a full-scale review of expenditure and revenue, including agriculture, and the right of the EU to make further decisions in this financial period, rather than having to wait until 2014.
	When Mrs. Thatcher returned from Fontainebleau she admitted to the House that because her Government had taken so much time on the problems of the budget, they had not been able to turn as much attention as they should have done to some other vital problems in Europe. We have done better. Away from the headlines, the Government have been getting on, successfully, with the vast majority of the business of a presidency.
	In pursuing our agenda we have worked closely with the European Parliament. British Ministers have visited the European Parliament on more than 50 occasions. My right hon. Friend the Minister for Europe sends his apologies to the House. He is at the European Parliament today—we have an able substitute in my hon. Friend the Minister for the Middle East—and my right hon. Friend the Prime Minister will be at the European Parliament tomorrow. This engagement with the European Parliament has been particularly worth while in our discussions with British MEPs. Indeed, I am heartened to say that we have been greatly assisted by British MEPs of all parties.
	As the House knows, each of the main British political parties is able to magnify its influence in the European Parliament through membership of the mainstream European political groupings. My party does so through the party of European Socialists, the Liberal Democrats do so through the Alliance of Liberals and Democrats for Europe, and the Conservatives do so through the European People's party and European Democrats or EPP, which covers the centre right. Who joins which group is a matter for MEPs and their parent British political party and not for the House, but the consequence of those decisions can directly affect the national interest. The House therefore has an interest in that.
	All those groupings are loose confederations. There cannot be a single party which agrees with every item on the European political agenda. National party groups are free to depart from the groupings' line where they wish. That right was enshrined, as far as the EPP is concerned, by the right hon. Member for Richmond, Yorks when he was Leader of the Opposition in the agreement that he made with the European People's party in 1999. However, there is real practical value for the UK in these groupings. In particular, there is practical value in the Conservative party's membership of the EPP, because the EPP is the largest grouping in the Parliament and has crucial positions on many of the key committees. It holds such positions on five of the key committees, and I am grateful for the support that we have received from those co-ordinators.
	The right hon. Gentleman recognised the importance of that when he was Leader of the Opposition. Indeed, as I said, he negotiated an agreement in 1999. When he signed that deal, he said that Tory MEPs would be joining
	"an enlarged coalition with centre right parties and will work alongside allies old and new".
	He went on to say:
	"Conservatives will stick to their principles and have influence".
	His predecessor continued the link, as did his two successors. Now we read that the right hon. Member for Richmond, Yorks is being pushed by his new leader, the hon. Member for Witney (Mr. Cameron), to leave the EPP
	"in a matter of months"
	and to form a new grouping.
	Who will sit in this new grouping? The right hon. and learned Member for Rushcliffe (Mr. Clarke) thinks the Tory MEPs will have to sit alongside "ultra-nationalists". The Conservative MEP, Mr. Struan Stevenson, says that they are
	"the MEPs whom no other group will tolerate, and include people like Jean-Marie Le Pen, Alessandra Mussolini and"—
	even worse—
	"Robert Kilroy-Silk".
	In a later article he describes them even more succinctly as
	"fascists and nutters that nobody else will sit with".
	The hon. Member for Grantham and Stamford (Mr.   Davies) has asked whether the Conservatives really want to sit with
	"the barmy-army of obscure right-wing continental politicians".
	The deputy leader of the Conservatives in the European Parliament who used to sit in the House, Sir Robert Atkins, thinks his new bedfellows will be
	"a pretty unappealing ragbag of fringe politicians".
	He gives further details:
	"We would find ourselves in the company of The League of Polish Families (racist and Europhobic), the Danish People's Party (Ian Duncan Smith banned us from even talking to them!), the Italian Fascist Party, and, of course, UKIP".
	Indeed, he quotes the right hon. Member for Richmond, Yorks as saying in 1999:
	"I simply cannot afford to have my political opponents in the House of Commons suggesting I am isolated from the mainstream Conservative parties on the continent of Europe."
	That is exactly what his new leader is proposing.
	I am therefore not surprised that when the right hon. Gentleman was interviewed about that on the "Today" programme he was plainly extremely uncomfortable. After all, it showed that the promised unity of the Tory party had lasted for all of 36 hours. But it also shows that the Conservative leader, the hon. Member for Witney, is prepared to tear up solemn manifesto commitments, for the Conservative election manifesto in 2004 stated that
	"Conservative MEPs will remain allied members of the EPP-ED parliamentary group for the duration of the 2004–2009 legislature."
	In the right hon. Gentleman's argument with his new leader he has our full support and our full backing in fighting for what is right and for the national interest, and in fighting for a Conservative party that at least on one thing sticks to the principles on which it was elected only 18 months ago.

Christopher Huhne: Having been a Member of the European Parliament I agree with the thrust of the Foreign Secretary's remarks and pay tribute, too, to Conservative MEPs. Does the right hon. Gentleman agree that this is a particularly futile gesture, given that the Conservative party's objection, as I understand it, is to the commitment of the EPP to ever closer union, which will of course be determined in treaty negotiation between the member states, and Members of the European Parliament will have no influence over that matter?

Jack Straw: Indeed. The Labour party is a member of the party of European Socialists. No one is suggesting that those are wholly disciplined parties or that we have to agree to every last jot and tittle of what is said, and we do not. All of us accept that ultimately it is for the national group to determine its approach. I make the point seriously, and the right hon. Member for Richmond, Yorks agrees with it, because that has been his position consistently over many years: the European Parliament exists and it has certain powers. It is important that we work with it in the national interest. There is nothing disingenuous in my saying that I applaud the way in which Conservative MEPs have worked with those on the Liberal Democrat Benches and on ours in the national interest. Much of that influence will be lost if they go the way not of the right hon. Gentleman, but of the hon. Member for Witney.
	I turn briefly to the wider progress that has been made in the European Union during the UK presidency. I mentioned the accession negotiations with Turkey. We have also opened accession negotiations with Croatia. The arrest last week of Ante Gotovina, the indicted war criminal, underlined the importance—in this, again, we had all-party support—of sticking very firmly to clear conditionality with Croatia, unless and until it assured its co-operation in delivering up Gotovina. That has been achieved.
	We have reached agreement on reform of the European Union sugar regime, which will save between €3.5 billion and €4 billion each year. We have embedded the principles of better regulation, which I dealt with earlier. We have agreed REACH, the directive on the registration, evaluation and authorisation of chemicals.
	In the field of justice and home affairs, Ministers have agreed a new Europe-wide counter-terrorism strategy and to manage migration and illegal immigration better. We have pursued an active common foreign and security policy, aid commitments have been doubled and a strategy for Africa has been introduced. We have also launched the international finance facility for immunisation.
	We have done a huge amount on Sudan, Aceh and the middle east peace process. At the beginning of our presidency, we inherited a Union coping with the Dutch and French rejection of the constitutional treaty and the failure of the Luxembourg budget proposals. We have used our presidency to help set a pathway for a modern, competitive Europe, and we have taken practical and measurable steps along that path. Now we want to secure a fair budget. In the negotiations, which start tomorrow, the Prime Minister and I are determined to do everything that we can to secure a deal that is good for Britain and good for Europe—building a stronger, wider, more prosperous Union in which our citizens, British and European, can thrive.

William Hague: I am grateful to the Foreign Secretary for the kind remarks with which he began his speech and for his welcoming me back to the Front Bench. He attaches an importance to the Darlington & Stockton Times that is appropriate for any Foreign Secretary of this country.
	I am delighted that my mere presence on the Front Bench has produced the radical reinterpretation of the Government's policy on the euro so that the pound has now been saved. When the Foreign Secretary discusses that reinterpretation of policy with the Chancellor and the Prime Minister, he may be carrying out a job rather like the one that he described for me, which involved doing a lot of travel but taking very few decisions.
	I am sure that we will have some vigorous debates across the Dispatch Box. My comments to the Foreign Secretary will be entirely free of personal abuse. According to the new convention in the Foreign Office, we can leave that to retiring ambassadors, who will no doubt continue to dish it out, so there is no need for the Opposition to indulge in such things.
	As there will inevitably be much disagreement, I shall start on a note of concord and congratulation to the Foreign Secretary. The negotiations on Turkish accession were protracted—they must have been very difficult and undoubtedly required hard work and skill—and he successfully steered them to the conclusion that we all wanted. I have no inhibitions in congratulating him on that achievement and hope that future blockages in the process of admitting Turkey to the European Union can similarly be overcome.
	There may be other areas of agreement across the Floor of the House and it is entirely possible that one of them is the fate of the European constitution. In addition to his role at the last hour in saving the pound, the Foreign Secretary played a key role on the European constitution, because if, as was reported, he persuaded the Prime Minister to commit the Government to holding a referendum in Britain, and if, as was reported, the British commitment prompted President Chirac to make the same commitment in France, then the Foreign Secretary did more than any other individual to ensure that the constitution was wrecked in May and June by voters in France. Although he is careful not to show any pleasure about that outcome, I cannot recall him issuing any words of regret, and even now there is no sign that it is causing him undue distress.
	If the Prime Minister and the Foreign Secretary were happy to see the deeply flawed constitution collapse, why were they prepared to recommend it to the British people in the first place? That they should keep their quiet satisfaction quiet is understandable. What is not understandable—my hon. Friend the Member for Stone (Mr. Cash) has made this point—is that they should make no use of the impasse on the constitution to take the initiative, to show leadership in Europe and to put forward ideas of their own.
	It is six months since both France and the Netherlands gave the constitution a resounding no. Within days, the Foreign Secretary announced a "pause for reflection". We have been having the pause for six months, but where is the reflection? He was unable to enlighten us on that point in his speech. Is this not the time, buttressed by grave anxieties about the remoteness and unresponsiveness of EU institutions revealed by the referendums, to champion fresh ideas about a more flexible Europe with a stronger role for national Parliaments, which many hon. Members on both sides would be happy to support?
	Was not that six months the time to speak the much needed truth that ever mightier central institutions in a tightly integrated bloc are an idea whose time has gone? Instead, in the absence of any alternative, the new German Government say that they will "seek to advance progress" on actually adopting the constitution once Germany takes the presidency in 2007.

Kelvin Hopkins: I agree with the right hon. Gentleman's comments. Does he remember that the first attempt to promote the constitution collapsed because of the resistance of Spain and Poland? At that time, the press reported that the champagne corks could be heard popping in Downing street. This time, the Government were more modest in their reaction to the collapse of the constitution, which is welcome.

William Hague: I do not know about welcoming the Government's modesty—we would welcome a bit of vigour in saying what they would do instead of the constitution. However, I am glad that the hon. Gentleman and I agree about the Government's policy.
	Perhaps the Minister for the Middle East, who is winding up for the Government, will tell us how long the pause for reflection will last. Is it a pause or has it become a way of life? Are the Government content to see those democratic verdicts one day ignored and the whole process revived? Would it not be a great shame if the Foreign Secretary's excellent work in doing such damage to the constitution were of no avail in the end? If the Government are not happy to leave a vacuum in which others will insert their own ideas, when will they propose something different of their own?

Gisela Stuart: Do the accession negotiations with Turkey indicate the future viability of the constitution? The constitution would have entrenched a relationship between small and large states that would be unsustainable if Turkey were ever to enter the EU.

William Hague: Having served on the European Convention, the hon. Lady learned a lot, which appears to have reinforced her hostility to many of the ways in which Europe is developing or trying to develop.
	Is the Foreign Secretary content to see the charter of fundamental rights, a document which, in the hilarious but notorious phrase of the hon. Member for Leicester, East (Keith Vaz)—we cannot debate these matters without mentioning it—has the legal status of The Beano incorporated into new EU laws? The famous Beano document has even been cited in the European Court of Justice, although it is part of the constitutional treaty, which has been rejected.
	Why did the Government not raise more than a whisper of protest when the ECJ created the power to introduce harmonised criminal law across the EU, a judgment that was fought by 11 Governments, including ours, but which brought forth from the Government only the response that
	"We believed it was inappropriate to harmonise criminal law at EU level."?
	Is that it? Are they going to say that it was "inappropriate" and leave it at that, without any attempt to put right in the future the relentless extension of EU competence by the ECJ that has been taking place in recent years? Are the Government entirely happy to see the steady loss of their own power to govern this country in its own best interests? Is it not time to stop going neatly along with an orthodoxy of integration that is not only out of favour with the peoples of Europe, but seriously out of date in the 21st century?

Keith Vaz: I, too, congratulate the right hon. Gentleman on his elevation to the Front Bench yet again. He has spent eight minutes discussing the constitution and other such matters, which are not the concern of the crucial discussions that will take place this week. When will we hear about Conservative party policy on those issues?

William Hague: The hon. Gentleman will hear plenty, but as the Foreign Secretary spent the last eight or nine minutes of his speech discussing Conservative MEPs in the European Parliament, the hon. Gentleman cannot lecture us about discussing matters that are relevant to the EU summit. These debates provide an opportunity to raise all issues about Europe.

William Cash: rose—

William Hague: We cannot go through these debates without giving way regularly to my hon. Friend.

William Cash: Following the remarks by the hon. Member for Leicester, East (Keith Vaz), is my right hon. Friend aware that the European reform forum has been taking evidence from not only the hon. Member for Leicester, East, but the right hon. Member for Rotherham (Mr. MacShane), my right hon. Friend the Member for Wokingham (Mr. Redwood), Will Hutton, Lord Owen and others with a view to achieving a reasonable analysis of what has been going wrong with the existing treaties, in order to form a clear basis on which to make policies that produce constructive answers to the questions that my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) is rightly asking but which, regrettably, the Foreign Secretary simply ducked?

William Hague: I am delighted that the hon. Member for Leicester, East (Keith Vaz) is playing a more constructive role outside the House than he played a few moments ago inside it—that is wonderful news.
	It is common ground across the House that Europe faces a crisis—the Prime Minister used the word "crisis" in his address to the European Parliament in June—and massive demographic social and economic challenges. I believe that it is also common ground that the EU has so far shown few signs of being able to meet those challenges. When the Prime Minister came to this House to trumpet the Lisbon summit, he announced
	"a sea change in European economic thinking"
	along with a "fundamental reorientation" that would bring
	"concrete measures with clear deadlines"
	and
	"urgent measures to make the European economy as a whole more competitive".—[Official Report, 27 March 2000; Vol. 347, c. 21.]
	Five years after all that, we find the Government calling plaintively for the implementation of the Lisbon agenda. The terrible truth of it all was laid bare by the report last year by Mr. Wim Kok and his distinguished colleagues, which pointed out that most of Lisbon had never been implemented, that as a result Europe was losing ground more quickly to the United States and Asia, that
	"its societies are under strain"
	and, as he ominously summed up:
	"What is at risk in the medium to long run is nothing less than the sustainability of the society Europe has built, and to that extent, the viability of its civilisation."
	The goal of the Lisbon agreement was to make Europe into the world's foremost knowledge-based economy by 2010. Now that we are halfway there, we can see that there is no prospect of being able to make such a claim in five years' time—far from it. Two studies in the past week have shown that European spending on research and development is falling further behind target and the gap with the United States and Japan is widening. Such figures are deeply disturbing, because it is obvious that, as European economies will not be able to compete with China and India on price or have a larger available work force, it is self-evidently vital that their capital must be used more intensively and productively if they are not to suffer severe economic consequences.
	It is impossible to envisage Europe competing effectively without high levels of investment in R and D and the highest possible standards of higher education. Yet the United States is striding ahead in higher education-based research and now has 17 of the world's top 20 universities. The Prime Minister raised higher education as a matter of serious concern in his second speech to the European Parliament on 26 October and asked the Commission to prepare a report on it. But the Government must realise that, as the success of higher education in the United States relies on the use of much private capital, deregulation, and the use of the English language, we are as likely to find the answer to these issues in the European Commission as on the moon.
	Anyone looking at the EU from outside, dispassionately and objectively, would think that tackling these issues at this and every summit would be the almost daily preoccupation of European leaders. Even according to the Commission's own forecasts, the European share of world economic output is set to be virtually halved in our lifetimes. The absence of any sense of urgency is remarkable and it is hard to see it as anything other than a collective dereliction of duty by Europe's leaders. Faced with a massive loss of relative economic strength, with profound consequences for the future of employment, prosperity and social cohesion and justice, the general response is indistinguishable from inertia and indifference.

Ian Austin: On leadership in Europe, what would the right hon. Gentleman say to the right hon. and learned Member for Rushcliffe (Mr. Clarke), who described his new leader's policy on Europe as "head banging"? What would he say to the Tory MEPs who said that it showed "bad judgment", would "create disunity", is "cloud cuckoo land", "absolute madness", "very curious", "barking", and "silly", and shows that he "knows nothing about it"?

William Hague: It is interesting that when we try to discuss some of the greatest issues that will affect Europe in the future, the hon. Gentleman can only read out a party brief about Conservative MEPs in the European Parliament. I assure him that nothing will be more encouraging to my right hon. Friend the Leader of the Opposition and me in carrying out the policy than that great concern is expressed about it by Members from other parties in the House of Commons.
	It is only fair to acknowledge—the Foreign Secretary made this point in his speech—that the Commission under Mr. Barroso has shown an increasing consciousness of such issues and, in a first tiny sign of hope, has managed to withdraw 68 pending proposals for legislation as part of a deregulation initiative. However, we must not get overexcited about that, as it turned out that one third of those withdrawn regulations were defunct association agreements with countries that have now joined the EU, and the total of 68 regulations withdrawn has to be set against the net increase of 4,806 regulations and directives over the past eight years alone.
	To be fair to the Prime Minister, his speech to the European Parliament in June did call for a change of direction. He said there was
	"a crisis of political leadership".
	He is right. He questioned whether Lisbon was being implemented and whether the EU was in any way
	"reconnecting Europe to the people".
	He was clear that
	"we cannot agree a new financial perspective that does not at least set out a process that leads to a more rational budget",
	and he said in ringing tones at the end that the people of Europe
	"are wanting our leadership. It is time we gave it to them."
	Subsequently, there has been astonishment in Europe that such bold rhetoric has been followed by so little initiative. While to us in Britain it is entirely normal to hear a brave speech by the Prime Minister that bears no resemblance to what follows, it comes as a shock to people in other countries. As the former President of Poland put it,
	"When I read what Tony Blair said in front of the European Parliament, I harboured the hope that the Brits would arrive in the Presidency with a new momentum . . . since then the weeks pass and scepticism grows."
	MEPs have apparently circulated missing persons notices featuring the Prime Minister's face, one of which said:
	"we have lost the President of the Council. From what we hear he is the British Prime Minister Tony Blair, although nobody has seen or heard of him . . . one rhetorically brilliant speech without consequences or follow-ups is simply not enough to secure success."
	Everyone in this House should be aware of that, and the Prime Minister above all.
	I doubt that Foreign Office Ministers can put their hands on their hearts and say that Britain is now more respected in Europe than six months ago, or that any seasoned commentator or other Government in Europe judges their presidency to have been a success. Indeed, it seems unlikely that even they would judge it a success, given the objectives that they originally set out for themselves.
	This debate on Europe in the run-up to this summit is different from those on most previous occasions. We have often engaged in a fairly predictable debate—for and against the constitution, or the social chapter, or the euro, or whatever it may have been—but this time Government and Opposition agree that Europe faces an intensifying crisis, including a crisis of leadership, to use the Prime Minister's own words. The tragedy is that, for whatever reason, and with all the admitted constraints on what can be achieved in a period of a few months, the Government have not shown the consistency, energy and purpose necessary to have any hope of alleviating that crisis or changing prevailing attitudes. They have often claimed to be winning the argument in Europe, but there is little evidence of that.
	One deeply depressing example of failing to win the argument is being played out in the world trade talks in Hong Kong. Could not the Government have given a stronger lead towards pushing the European Union into a position more committed to free and fair trade and assisting real progress in a way that would help developing countries? Has not the lack of any reform of the common agricultural policy become a major problem for world trade negotiations, as demonstrated by the statement by Peter Mandelson's spokesman that EU subsidies will not be reduced by "one cent"? Should not the EU be going much further towards reducing tariffs and export subsidies? Is it not depressing and disturbing for the Government when a Commissioner who was until recently one of their own colleagues attacks the idea of liberalisation and states his opposition to
	"what the consequences would be if we were simply to do as some in the British government . . . are calling for"?
	I hope that when the Minister winds up he can say whether he considers that the Government have used all possible weight to influence the world trade talks in a way that would open up opportunities for developing countries without imposing over-stringent conditions on them and, if they have used such weight, why it has failed. Surely we did not join the EU to stand in the way of trade liberalisation and free trade. The Swedish Trade Minister said:
	"The French have been very active, not least in the public debate, while there has really been very little said by the free traders."
	Why has so little been said?

Andrew Turner: As always, my right hon. Friend makes a terrific case. However, is not it the case that, whatever our success in winning the argument, root-and-branch reform is needed to ensure that the people at the rudder and those in the engine room—the Commission—begin to follow the instructions of the skipper, that is, the politicians?

William Hague: We will run into trouble if we connect the skipper with the rudder by a root and a branch, but I take my hon. Friend's valid point.

Chris Bryant: The right hon. Gentleman is discussing common agricultural policy reform and I do not believe that a single hon. Member would not like reform as urgently as possible. How much does he believe that British farmers should receive in CAP payments? Last year, they received £1.7 billion. The Duke of Westminster received £448,000, the Duke of Marlborough received £511,000, the Duke of Bedford received £366,000, the Earl of Plymouth received £459,000 and the Marquess of Cholmondeley received £306,000. Are all those payments appropriate?

William Hague: No, of course they are not. Reform of the CAP would greatly reduce such payments. Huge payments are also made to large farms throughout the rest of Europe.
	We agree on the need for reform of the CAP, which brings us naturally to the hot topic of this weekend's summit—the budget and the position of the EU rebate. An elector who participated in this year's general election only seven months ago would have had no doubt where the Government stood on the matter. Their mantra was that the rebate was "non-negotiable and fully justified." Any attempt to reduce Britain's rebate would be vetoed and blocked. It does British politics no credit when a cast-iron, comprehensive commitment, which was so freely given, is rapidly and deliberately abandoned. How Ministers expect any future assurances that they give on such matters to be believed is beyond imagining. Yet only five weeks passed after the general election before the Prime Minister devised a new and fascinating formulation. On 8 June, he said at the Dispatch Box:
	"The UK rebate will remain and we will not negotiate it away. Period."—[Official Report, 8 June 2005; Vol. 434, c. 1234.]
	For those of us who are connoisseurs of the Prime Minister's extraordinary ability to face several directions simultaneously that statement was a particular treasure.
	When the study comes to be written of the Prime Minister's techniques, the statement should have a chapter devoted to it. First, there was the fascinating use of the word "period", which initially seemed to derive from his recent visit to the United States and his habit of starting to imitate any audience that he wants to please. However, he was using it in a more calculated way—to give emphasis to an otherwise meaningless statement. The phrase,
	"we will not negotiate it away"
	literally meant that the Government would not give away the entire rebate but might give away 10 per cent., 50 per cent. or even 90 per cent. The word "period" was used simply to fool everybody, like thumping the table hard while saying, "I don't know." It is testimony to the Prime Minister's skill in double-speak that he largely got away with that emphatic but meaningless statement.
	The statement's meaning soon became clear. The rebate was indeed up for negotiation but only in return for genuine reform of the CAP. As reported on 13 June, the Prime Minister said that the British rebate could not be discussed unless that happened alongside a debate on all EU financing, including the
	"40 per cent. of the budget that goes on agriculture, which employs only 5 per cent. of the people".
	He said that there had to be fundamental changes
	"in particular to the agriculture policy."
	That was not the Prime Minister's policy when he ran for election only a few weeks previously. Nevertheless, it was not an unreasonable policy.
	Offering to trade part of the rebate for sensible reform of the CAP, with a view to making the EU work more effectively and without additional expense to the British taxpayer, was not an unreasonable negotiating position. The Government were right to stress the urgency of the matter, with the Prime Minister saying,
	"Europe just cannot wait 10 years or more for the change that is necessary."—[Official Report, 20 June 2005; Vol. 435, c. 523.]
	The Chancellor was applauded at the Labour party conference for saying:
	"If we are to make poverty history . . . let us seek to make the excesses of the CAP history."
	The Government were in a strong negotiating position. Since the rebate is a legal entitlement, with any changes to it subject to our veto, it is clear that there would be no need to ask the British taxpayer to stump up billions of pounds of extra contribution to the EU, on top of the massive contribution that they already make, without getting something serious in return.
	The moral and economic grounds for CAP reform are strong. There are many willing allies on the subject in Europe and serious reform would free resources to help the new and future entrants to the Union. All in all, the position, albeit different from that in the election campaign, had merit and strength. Then the Government came up against the response of President Chirac, whose statement on Bastille day was intransigent:
	"I am not willing to make the slightest concession on the Common Agricultural Policy".
	It was also bizarre. He said that
	"the CAP is the future".
	How about that for a perspective different from the Government's?
	At some stage after that highly unco-operative response, panic seems to have set in in Whitehall. The talk of firm leadership in June was drowned out by the noise of gears crashing into reverse in November. The Government's position moved from being described by the Deputy Prime Minister on 6 July as one whereby
	"the Prime Minister certainly wants to get rid of the present CAP."—[Official Report, 6 July 2005; Vol. 436, c. 299.]
	to one of seeking only the vaguest commitment to future reform.
	Moreover, no plan for CAP reform seems to have   been submitted by the Government. The EU Agriculture Commissioner wondered whether Britain's proposals were
	"just a gimmick or game-playing"
	and the French Agriculture Minister said two weeks ago:
	"Ever since my arrival nearly a year ago there hasn't been a single EU Agriculture Ministers' meeting where reform has come up, including from the British Minister."
	The Slovak Prime Minister said in October:
	"Silence reigns. We do not have information . . . it is . . . important . . . that we ask our British colleague how he imagines the contours of the reform."
	Does not the Foreign Secretary consider that the deployment of powerful arguments for fundamental change and the readiness to sacrifice a rebate of immense financial value to this country required a more serious, informed and diplomatically effective attempt to create some real momentum for reform? How on earth could the Government talk in that way yet come up with no proposals so that even well disposed countries were left muttering in the dark?

Hugh Bayley: Is the right hon. Gentleman genuinely suggesting that Latvia, Estonia, the Czech Republic and Poland, having escaped from the shadow of communism, should now pay a subsidy through the rebate to the UK Treasury as a price for joining the western family of free nations?

William Hague: As the hon. Gentleman knows, the United Kingdom is one of the largest contributors to the EU. To talk of any other country in the EU subsiding us is therefore not the correct analysis. We already send enormous subsidies to the countries that are entering the EU. It is no good describing my position as unreasonable since it was the Foreign Secretary's position only a few weeks ago. It is right to consider trading part of the rebate in return for genuine reform of the CAP. That is the position from which the Government have now retreated. They have moved from talking about getting rid of the current CAP and showing "firm direction" and "firm leadership", according to the Prime Minister, to a policy of progressive capitulation that will cost British taxpayers at least £5.5 billion with nothing guaranteed in return. That is the equivalent in expenditure of 53,000 nurses or 39,000 teachers.

Jack Straw: My hon. Friend the Member for City of York (Hugh Bayley) asked an important question to which the right hon. Gentleman replied inadequately. We are not giving up a single penny of the rebate in so far as it affects any spending in the 15 western European nations or spending on the CAP. However, we unapologetically believe that we should make a fair contribution to the costs of enlargement and investment in the structural and cohesion funds for the 10 new accession states. That has been the Conservative party's consistent position. Given that, and all the calls for spending on those eastern European states, why does not the right hon. Gentleman have the courage of his convictions and say that the Opposition should support the Government in making that fair contribution?

William Hague: I have the courage of the Foreign Secretary's convictions only a few weeks ago, when the rebate was not even to be discussed unless that happened alongside genuine reform. He was absolutely right to say in his speech that there was common ground across the Floor of the House on a lot of these matters. The issue is not whether we pay our fair share to help the countries that are joining the EU, but what that contribution should be. He was also right, in his initial negotiating position—a powerful one, given the legal entitlement to the rebate—to insist on reform of the CAP so that other countries as well as ours paid their fair share to those EU entrants. Now, however, the Foreign Secretary's own concrete concessions are being given without any bankable commitment to serious CAP reform for years to come. Rarely in the field of European negotiations has so much been surrendered for so little. That is my criticism of the Government's position.
	Could it be that the former ambassador to Washington is right when he refers to
	"the dull detail of tough and necessary bargaining: meat and drink to Margaret Thatcher but . . . uncongenial to Tony Blair"?
	Have not things come to a sorry state when the Government's position is mercilessly mocked in an e-mail from one of their own ambassadors, our ambassador to Warsaw, who said that
	"we all know that the absurdity and hypocrisy of this process are passing any reasonable limit."
	He characterised the Government's position by saying:
	"I am being asked to give more UK taxpayers' money to an EU which for years cannot produce properly audited accounts. Mon ami Jacques, with the support of most of you, is nagging me to give the EU more money while refusing to surrender an inch or even a centimetre on the CAP—a programme which uses inefficient transfers of taxpayers' money to bloat rich French landowners and so pump up food prices in Europe, thereby creating poverty in Africa, which we then fail to solve through inefficient but expensive aid programmes."
	If the Government's own ambassadors do not believe in the Government's new position, who does? The ambassador even advocated setting aside the £5 billion that the Government propose to surrender from the rebate in order to create—I cannot quote every word of this in the House—a special development fund cutting out
	"all the [expletive deleted] EU bureaucracy"
	and the amount that goes into
	"sticky transaction costs, local and Brussels corruption, overhead and other rubbish."
	What is this man doing as an ambassador when he should clearly be a European Commissioner?
	Will the Minister explain, when he responds to the debate, why the extra concessions on the rebate, announced on Monday last week, were not factored into the budget deficits for the coming years set out by the Chancellor that same afternoon? If he had been a prudent Chancellor, he would, of course, have wanted to take account of, and make provision for, money that the Foreign Secretary was proposing to give away. If not, it seems that the Foreign Secretary has removed a large slice of any remaining margin possessed by the Chancellor to meet his golden rule, even on the new fictionalised basis.
	Somehow, from a position of enormous strength, strong domestic support, many potential allies and a good moral case, the Government have managed to emerge in Europe as the villain of the piece, making concessions that are paid for directly by British taxpayers while simultaneously alienating the new entrants to the EU, upsetting almost everyone else, gaining no concessions whatever from the French and failing to achieve even the slightest part of their objective. Is that not a sorry position for a Government to have reached in advance of an important summit? While there is great agreement across the House on the causes of the European crisis, this much-vaunted presidency of the EU has done almost nothing to resolve them.

Keith Vaz: It is always a pleasure to follow the right hon. Member for Richmond, Yorks (Mr. Hague). May I congratulate him again on his appointment to the Front Bench? His speech was full of witticisms and knock-about stuff. The pantomime season really has begun, but I am not sure whether he is Cinderella or Mother Goose.
	The right hon. Gentleman and I have a lot in common. It is not well known that I gave him his first job in the House, when I was chairman of the very important all-party footwear and leather industries group—probably the high point of my career. The right hon. Gentleman was a new Member and I made him my secretary because his footwear was always in a good state of repair. I am glad to see that he has done so well. We have another bit of shared history. When he was the Leader of the Opposition and I was Minister for Europe, we both took a bus tour around the United Kingdom. Mine came first—I had a customised campaign bus, in which I undertook 25 engagements in five days. The truck for his campaign to save the pound was sited in St. Albans. We did not actually meet, but I think that he abandoned his tour shortly after it began, such was the state of the Conservative party at that stage. The other thing, of course, is that we both had more hair at the time.
	This is an important debate and I am glad to see that we have three heavyweights on the Front Benches talking about foreign policy. I congratulate my right hon. Friend the Foreign Secretary on winning the Minister of the year award in The House Magazine last week. That award was well deserved, and I did in fact vote for him. I hope that he will remember that. These European debates, which often used to attract only the usual suspects, now gather a much larger audience. That is good, because it is important that we should have strong, vigorous debates on Europe, and it is always good to know what Conservative party policy is on Europe.
	My regret, in listening to the right hon. Member for Richmond, Yorks, was that he spent 21 minutes talking about issues that were really not the concern of the forthcoming discussions in Brussels. It is important to have this debate now because we have been calling for a debate on the UK presidency, but it is a pity that he wasted the opportunity to put forward Conservative party policy. He spent his entire speech—eloquently and wittily, as always—attacking the European Union, saying that it was not up to the job, and criticising the Government and officials. That was a waste of an opportunity.
	We have a real opportunity to show leadership in Europe, but every time we discuss the European Union in the House, our debates consist of the Opposition attacking everything that the Government are proposing, and criticising Ministers for not standing up for Britain's interests. The right hon. Gentleman knows, as a former member of the Cabinet, that when British Ministers attend these summits in Brussels or wherever, they bat for Britain. They do everything that they possibly can to further Britain's interests. I am really disappointed that every speech from the Conservative Front Bench contains the criticism that we do not act in Britain's interests, because we do. That is what the right hon. Gentleman did when he was a Minister, and that is what our Ministers do when they perform their duties in Brussels.
	This has been a good presidency, albeit a low-key one. I would like to have seen much more campaigning on European issues by our Foreign Secretary, because he has real style and panache and he is able to put forward the best of Europe to the British people. Inevitably, however, because of the great difficulties involved in organising a presidency over a six-month period, British Ministers have had to engage in the crucial decision-making processes.
	We have had a huge success with Turkey, and it is worth reminding the House of the support that the Opposition have given to enlargement over the years. The Foreign Secretary generously paid tribute to John Major for the steps he took when he was Prime Minister. Certainly, the process was accelerated from 1997 onwards when our Prime Minister became a champion of enlargement. Through the previous Foreign Secretary, the late Robin Cook, and the present Foreign Secretary, Ministers have been fully engaged in the enlargement process. We all look forward to the day when Turkey joins the EU. It will be a different EU by then, but it will be one that truly embraces the whole of Europe. As we started the negotiations on Turkey, it was also important for us to give a green light to Croatia. The entry of the Balkans will also be crucial to the peace and stability of the European Union, and that process rightly started under our presidency.

William Cash: Does the hon. Gentleman agree that it would be impossible to achieve the result that he would prefer, namely, a different kind of structure in Europe, while hanging on to the past and to the constitution? Are not serious changes needed to return power to the national Parliaments and, as I would prefer, to go down the route of associate status, so that we could address the real question of how to accommodate the proper aspirations of the enlarged European Union and of Turkey?

Keith Vaz: I do not agree with the hon. Gentleman's conclusions, but I pay tribute to his analysis and the work that he does in this area. What he does with the European Reform Forum in taking evidence on these issues is extremely important, as the House should discuss European issues not just in the Chamber and European Scrutiny Committee but on an all-party basis. In that way, we will find a great deal about which we agree, as well as issues about which we disagree.
	Turkey must be admitted as a full member because it seeks that kind of status. I do not agree that we should have a two-class Europe. That is why I supported the Government in the measures that they took to ensure that when the latest enlargement took place, on 1 May 2004, we allowed workers from the 10 new member states to work in our country. What a benefit they have been to the British economy, even though the then leader of the Conservative party—I do not hold the right hon. Member for Richmond, Yorks responsible, as he was not an Opposition spokesman on that occasion—predicted that there would be chaos in our benefits system and huge problems of social cohesion. Those who came in as part of the last wave of enlargement have contributed to the British economy and enabled us to take a leadership role in Europe. While Germany and France did not allow them to work, we did, and that is the right course of action. In relation to Turkey, those are the only issues about which I would be concerned.
	I hope that we will get a decision on whether Romanian and Bulgarian workers will be allowed to come here on an equal basis with the rest of European Union citizens before the 2007 deadline, as it would be wrong to leave it until the last minute to be fuelled by hysteria in the tabloid press. I hope that we will get that decision soon, as it is important that we send out a signal to the rest of Europe that we are the champions of enlargement.
	That leads on to what the Foreign Secretary has said about the rebate and the difficult negotiations that are going ahead, and I wish him and the Prime Minister well in those. I remember sitting round the table and trying to get agreement with other Ministers in an EU of 15. In an EU of 25, however, it must be extraordinarily difficult. I pay tribute to all our Ministers for the way in which they have engaged in discussions, especially with the new member states. The right hon. Member for Richmond, Yorks commented on the Prime Minister, Foreign Secretary and other Ministers not being seen in other parts of Europe over the past six months. That is because they have been dealing with crucial negotiations. In the past week alone, five Prime Ministers—perhaps more—and dozens of Ministers have come to London to have meetings to try to resolve the problem.

Kelvin Hopkins: My hon. Friend talks about the difficulty of securing agreement between 15 and now 25 member states. Rather than trying to force through decisions that cause difficulties, would not it be easier if we had a much looser arrangement in which each member state had a higher degree of independence?

Keith Vaz: My hon. Friend keeps saying that, but of course those states have independence. That is why we have discussions. We are not trying to force through these issues, and nobody tries to do so. Ministers do not turn up and try to dragoon people into supporting our view. There must be a process of painful negotiation and agreement, which is why it takes so long. That is why the Foreign Secretary has honestly told the House—the House admires his plain speaking—that if there is no deal, there is no deal. The Government will do their best, however, to ensure that there is a deal.
	It is right, of course, that discussion about the rebate needs to be set against reform of the common agricultural policy. We have sought to do that for the past eight years. When the Conservative party was in government—and when the right hon. Member for Richmond, Yorks was a Minister in John Major's Government—I did not see Conservative Ministers coming to the Dispatch Box and telling us about all the work that they were doing to try to reform the common agricultural policy. I did not hear about any campaign by the then Conservative Government to try to put right the iniquities that were present, and are still present, in our system. All we had was silence.
	All that I know in respect of the CAP policy is that Ministers have been trying for the past eight years to do something about the iniquities of the CAP. The budget must be set in that context. We cannot have a fundamental reform of the EU budget unless we have a fundamental reform of the CAP. There is agreement on both sides of the House on that. That is why the Prime Minister and Foreign Secretary rightly said that we negotiate about our rebate in terms of a reform of the CAP.
	The cost of enlargement is quite different. One cannot be in favour of enlargement and want a wider Europe and then not pay for the costs of a wider Europe. Of course, the 10 new member states are benefiting because of the millions of euros that will be spent on those countries. Why do they need to be spent? Because those countries need to be brought up to speed with the rest of Europe, and because it benefits our country to have countries with which we can trade—which are our partners and with which we can trade on an equal basis. That is why we are spending all that money on the issue.

Kelvin Hopkins: My hon. Friend talks about our generosity to the new countries coming in from eastern Europe. The amount of money that they receive from the CAP is a tiny fraction of that received by the rich countries in western Europe. It is an absolute nonsense. If there was sincerity about the CAP, those new countries should have the same proportion of CAP spending as other richer nations. Then, of course, the whole thing would break down.

Keith Vaz: On that point, my hon. Friend is absolutely correct. That is the case that is being made—that there must be a reform of the CAP. It is unfair because it favours France. We should ask the Polish farmers—and the Polish Government when they were seeking to join the European Union—what they think about that. Of course they want a much fairer deal. Until they have that fairer deal, however, it is up to European Union countries, through structural and cohesion funds, to give them a deal that will enable them to do the kinds of things that we want them to do.
	As I understand it, that is the basis of the deal currently on offer from the Foreign Secretary. The rebate is to be considered in the context of the common agricultural policy, but we need to find other ways in which we, as a rich nation, can contribute to the new members so that they do not lose out as a result of our rebate. We must therefore give them additional funds to make sure that they can reach the level that we promised them when they joined the European Union. That also means considering the way in which those funds are dispensed. We do not want to see public opinion in the new member states waning since they joined the European Union, which appears to be happening, because they look at the European Union and see an organisation that seems not to be willing to reform.
	In the discussions that my right hon. Friend the Foreign Secretary has over the weekend, I hope that he will pursue the reform agenda, as the right hon. Member for Richmond, Yorks said he should be doing. I have raised that matter with the Foreign Secretary on a number of occasions. There is no prospect of the constitution being adopted at this moment—my right hon. Friend the Foreign Secretary has been given credit in that regard, but I know that he is too modest to accept such plaudits—but the fact remains that reform is needed of the structures and practices of the EU.
	That was originally set out in the joint letter from the then Chancellor Schröder and our Prime Minister in February 2002. That reform agenda is essential if we are to make the European Union work efficiently, especially in respect of the Lisbon agenda. Of course, the Kok report was damaging, but that was the point of having a report five years after Lisbon—to see what had been achieved. Many benchmarks have not been met—we have done better than other countries, but it is essential that that reform agenda survives beyond our presidency and into the Austrian presidency, and into the discussions and negotiations that we will ensure happen after our presidency has finished.
	The world will not end on 31 December. The EU is an ongoing process, and I seek an assurance from my right hon. Friend the Foreign Secretary and my hon. Friend who will wind up the debate that we will pursue the reform agenda in a vigorous way. That does not depend on the constitution, as it is independent of it, but we must get those reforms moving if we are to play a real part in providing leadership for the EU.

Menzies Campbell: This has been a slightly unusual debate in a number of respects. First, the hon. Member for Leicester, East (Keith Vaz) departed from the sanctity of the ballot and revealed that he had voted for the Foreign Secretary—no doubt he had no ulterior motive whatever in doing so. A habit also seems to have arisen, almost like the congressional record in the United States, of making reference to local institutions such as local newspapers. Not to be left out on this occasion, I should like it to be known that I more than value the contribution of the St Andrews Citizen to the great political debates of our time.
	There has been a warm and genuine welcome—an affectionate welcome—for the right hon. Member for Richmond, Yorks (Mr. Hague), who demonstrated, in a trenchant speech, the considerable talents that he possesses and of which we hope to hear and see more in future debates. I have been trying to formulate in my mind how the change in personnel effected by his new leader could best be characterised in relation to him. I suppose the best way of putting it is to say that the hon. Member for Witney (Mr. Cameron) shot the fox and gave us the comeback kid.
	I shall discuss the issue of the deal in some detail in due course, but let me first point out that at one stage the Foreign Secretary said that no deal was better than a bad deal. The phrase has a certain resonance on occasions such as this, but when we analyse it we must ask what would be the consequences of there being no deal. What would be the political consequences in the European Union, and what would be the consequences for the influence of the United Kingdom? Can we be confident that if the matter were, so to speak, kicked into the arms of the Austrian presidency, a better deal would emerge from those circumstances?
	Those are all questions that cannot, I think, be answered in this debate. Although we now have, in the form of a ministerial statement, an up-to-date indication of the Government's position, all the issues will be on the table on Thursday and Friday, Saturday, Sunday and perhaps even Monday, and the truth is that they may well change in material respects. The verdict on the proposals will have to rest until the Government, on Monday or perhaps even Tuesday of next week, return to report on precisely what they have achieved.
	To an extent, that makes our debate a little artificial, but it is undoubtedly important because, as the right hon. Member for Richmond, Yorks said, the European Union stands at a very important point in its history and its evolution. It is worth reminding ourselves—and the right hon. Gentleman made some reference to it—that in his speech to the European Parliament on 23 June, the Prime Minister eloquently set out United Kingdom priorities for the presidency. The speech received considerable support from those who heard it in the Parliament: indeed, it brought the Prime Minister an unaccustomed ovation there.
	The Prime Minister said in his speech that he believed that the French and Dutch rejections of the constitution constituted
	"not a crisis of political institutions, it is a crisis of political leadership. People in Europe are posing hard questions to us."
	In that speech, he raised expectations. He raised expectations that the crisis would be met, and that the hard questions being posed by the people of Europe would at least be the subject of an attempt to answer. I am afraid that, despite the Foreign Secretary's brave face on matters, history will judge that—with the exception of the opening negotiations on the accession of Turkey and Croatia—there has been, unhappily, a lack of substantial achievement during the presidency.
	Some will say that the Prime Minister has failed his own test: that the political leadership to which he pointed in that eloquent speech has not been on display, and that the hard questions being asked by the European public have not been answered. I suppose one could say that the Prime Minister has been caught between the promise of his own rhetoric on that occasion and the failure of achievement that many will consider to be a characteristic of this period of the United Kingdom's responsibility.

William Cash: rose—

Menzies Campbell: Like every other Member, I am always happy to give way to the hon. Gentleman.

William Cash: I am most grateful.
	Is it not possible that the real reason why the Prime Minister is having so much difficulty and has failed is that, despite his best efforts to secure an open, competitive Europe, the others are not listening? They do not want to change the acquis, they want to stick to the constitution, and the Prime Minister has pretty well given up banging his head against a brick wall.

Menzies Campbell: I think that the material phrase in that intervention was "despite his best efforts". If I were satisfied that we had seen the Prime Minister's best efforts in this regard, I might be more sympathetic to the hon. Gentleman's position, but I do not believe—although I realise that we are dealing here with value judgments—that over the past six months we have seen the best efforts to which he refers.
	We must, of course, accept that the conditions for progress were far from encouraging. President Chirac and Chancellor Schröder have failed signally to support the reforms that are necessary to enable Europe to respond better to the challenges of globalisation. I have made the point before, but I do not hesitate to make it again.
	The economic advance of China and of India should not be seen in a vacuum. Those countries will seek to exercise greater political influence based on that economic advance. One illustration is the extent to which China is now investing in its defence forces and adopting, to a degree, a more robust approach to Taiwan. India, meanwhile, is demonstrating an overwhelming conviction that it is entitled to—and should soon be admitted to—permanent membership of the United Nations Security Council.
	It is possible, in a sense, to bury one's head in the sand in relation to the economic explosion that is taking place in those two countries, but it is certainly not possible to do so in relation to the political influence that they will seek to exert—a political influence that will definitely impinge on the interests of the United Kingdom and, of course, those of Europe.

Kelvin Hopkins: rose—

Menzies Campbell: Here is another Member to whom I am always happy to give way, in the sure and certain knowledge that I have some idea of where he is coming from.

Kelvin Hopkins: All of us in the Chamber take certain positions, but I should like to think that mine is rational.
	The right hon. and learned Gentleman suggested that there was a failure of leadership in Europe on issues of reform. Is it not a fact that the peoples of Europe are simply rejecting what their leaders are telling them? At the last German election, when the Christian Democrats tried to win an election on that basis, people returned to the Social Democrats in droves because they did not want liberalisation.

Menzies Campbell: That is a measure of the fact that the case has not been properly put. I do not think that any of us should have any confidence in a notion that things will continue as they have in the past. I believe that so far we have failed signally to understand what the economic and political impact of the resurgent countries will be. The sooner we get abreast of that, and the sooner it is understood in the chancellories of Europe, the better things will be both domestically and for the European Union.
	One problem is that the United Kingdom, and the presidency, have had difficulty in exercising influence. I concede that much to the hon. Member for Stone (Mr. Cash). Nevertheless, I do not recall, over the past six months, any serious efforts to initiate high-level political dialogue on these political issues. In that respect, I agree with the right hon. Member for Richmond, Yorks. Part of the difficulty of initiating such dialogue is caused by the continuing legacy of the disagreement over Iraq. Whatever our view of the rightness or wrongness of the military action that was taken, that is the context and the background against which we may unfortunately have to continue to operate for some time.
	Reference has already been made to the period of reflection that was supposed to follow the rejection by the French and the Dutch, in referendums, of the constitutional proposals. I do not think we need dwell on that document to any great extent, because I believe it is clear to those of us who supported it and to those of us who opposed it that it is moribund. What is likely to occur now is a period during which a European Union of 25 will be compelled to operate within the framework of the Single European Act and the treaties of Rome, Maastricht, Amsterdam and Nice. It is my firm belief that the constraints imposed by the differing sources of the acquis, and by the fact that finding out where powers do or do not rest requires an extraordinary amount of investigation, will prove sclerotic.
	In a European Union of 25, it will swiftly be realised that arrangements that were appropriate for a Union of six, 12 or 15 are simply not sufficient. Through force of events, we will come, one way or another, to a point at which people will say, "We ought to try to produce one document that incorporates the essentials." That will provide a further opportunity, which I hope will be taken, to embrace the principle of subsidiarity, to ensure that proportionality lies at the very heart of what the European Union does and to produce the constitution for which many in this House argued: a constitution that reflects rather more simplicity than the—in the minds of many people—complicated proposals that eventually emerged from the convention.

Peter Bone: I understand what the right hon. and learned Gentleman is suggesting, but there is an alternative approach that might be being considered, and which has already been adopted by the EU bureaucrats: to bring in parts of the constitution by the back door, by stealth, as they have always done.

Menzies Campbell: There was some agreement in this House that parts of the proposed document could be introduced without the need for constitutional proposals. One example that I can refer to, and which was mentioned by virtually everyone who spoke in the six, seven or eight debates that we had on this issue—[Interruption.] The Foreign Secretary indicates by semaphore that there were six such debates. Virtually everyone who spoke in those debates was of the view that the proceedings of the Council of Ministers should be in public and that voting should take place in public—that there should be transparency to a degree not previously achieved. We could do those things now, and if such measures were in effect they might help to deal with the disillusionment of the people of Europe to which the hon. Member for Luton, North (Kelvin Hopkins) referred earlier. I may be proved wrong, but it is my belief that in due course, the pressure of trying to operate 25 countries—perhaps it will be 27 or even 30; who knows?—within the framework of the existing treaties will become such that the need to alter the constitutional position will become overwhelming.
	During his speech, the right hon. Member for Richmond, Yorks variously quoted the Prime Minister speaking in the House of Commons. As he rightly said, on 8 June the Prime Minister said:
	"The . . . rebate will remain and we will not negotiate it away."—[Official Report, 8 June 2005; Vol. 434, c. 1234.]
	Two weeks later, the Prime Minister said that, after his talks with the Swedish Prime Minister, he was in fact prepared to negotiate on the rebate. It has been our consistent view, in supporting the Government, that the rebate should be renegotiated only in return for wider changes to the European Union budget, and in that regard I agree with the principle that Great Britain should be willing to make a contribution to the cost of enlargement.
	The hon. Member for Leicester, East made a point earlier about public opinion in the countries of the 10. One need not go very far in those countries to find an approach to, and support for, Europe that is a long way short of the euphoria that was characteristic only 18 months to two years ago. We should remember that the purpose of the European Union is not just to provide a market and economic opportunity, but to ensure political stability. So it cannot be in the long-term interest of the European Union as a whole that disaffection with the EU should arise in those countries because of a failure to meet obligations, and because of a feeling that expectations have not been properly met.
	Part of the Government's difficulty is that they failed to set out what the changes to the budget ought to be. There are two particular changes for which we would argue. First—here, the right hon. Member for Richmond, Yorks and I are again in agreement—there should be a significant improvement in the EU's position on tariff cuts during the World Trade Organisation negotiations. Given what the Commissioner said this morning, it seems that it is too late to achieve that in Hong Kong: he has gone there with a certain mandate or remit, beyond which he cannot go. But Hong Kong will not be the end of the matter. If we are concerned about the fate of the poorest countries in the world—as we rightly should be, as many of our constituents are and as the G8 summit appeared to be—making more concessions on agriculture is absolutely essential. Perhaps most important of all, we need to tackle the practice of dumping, which undercuts indigenous agriculture and puts farmers in the countries in which dumping takes place in an impossible position. It is hardly surprising that there is such indignation in those countries, where agriculture is often at subsistence levels or just above.
	I turn to the second change for which we would argue. It is surely time to consider restructuring common agricultural policy funding through co-financing. European Union support would be substantially reduced and member states would be permitted, under conditions, to supplement it if they so choose. That would give more responsibility and influence to domestic Parliaments. In turn, it would benefit EU consumers, help to make more progress toward the creation of a free market in Europe, and be of considerable benefit to economies in the developing world. There has been a sad lack of detailed reform of the Government's position on this issue.
	Everyone agrees on the need to reform the CAP, which has been described as an anomaly. I cannot remember a single Member making a speech in favour of it, but in talking to representatives of the National Farmers Union in my constituency, it is clear that many of our farmers regard the CAP as being of significance. [Interruption.] Given the nodding of heads in the Chamber, I suspect that my experience is common to others. Those farmers are waiting with some anxiety to see how the single farm payment system, introduced some 12 months ago, will operate in real-life, practical terms. But I have no doubt that the CAP does require reform.

Kelvin Hopkins: I am sure that it is the subsidies that the farmers like, rather than the CAP. If they were provided domestically by the British Government, they would be just as happy.

Menzies Campbell: Yes, that may well be so, and that is an argument for financing.
	The difficulty with the Government's approach to CAP reform is that no detailed proposals were put forward. CAP reform was mentioned only twice in the White Paper on the presidency: once in the context of reform of the sugar regime, which had already been proposed by the Commission, and once in the glossary.

Jack Straw: Will the right hon. and learned Gentleman give way?

Menzies Campbell: In a moment.
	If we were serious about CAP reform, we surely had an obligation to put on the table the precise way in which we would seek to bring about such reform. We can hardly be surprised at a lack of enthusiasm for reform if we fail to provide the detail necessary for people to make an informed judgment.

Jack Straw: I am very grateful to the right hon. and learned Gentleman for giving way. I have sat here listening to his complaints about our alleged lack of vision for agriculture, as echoed by the right hon. Member for Richmond, Yorks (Mr. Hague), with some surprise. We have produced a series of papers on CAP reform and we have followed that policy in practice, as illustrated by the big reduction that my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs achieved the other day in respect of sugar. Just two weeks ago, we brought together this approach in a 70-page document entitled "A Vision for Common Agricultural Policy", which was published jointly by my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for Environment, Food and Rural Affairs and put before this House. I am very surprised that the right hon. and learned Gentleman and his staff, who are normally well-informed, failed to spot this.

Menzies Campbell: I spotted it, but four weeks away from the end of the presidency, one has to ask precisely what kind of impact it will have. The whole House has been united on this issue for a long time. Surely, if we were serious about securing this necessary reform, we would have been in the market—no pun intended—with proposals long before four weeks before the expiry of our responsibilities.

Graham Brady: It is actually even worse than the right hon. and learned Gentleman and my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) have said, because the document to which the Foreign Secretary refers—"A Vision for the Common Agricultural Policy", which was published two weeks ago—states:
	"The vision in this paper focuses on where we need to be in 10 to 15 years time, and why. It does not set out a route map for getting there."
	Even at this stage, the Government have no concrete proposal and no idea how to achieve the objective.

Menzies Campbell: Perhaps the Government need one of the devices that can be fitted to the motor car: if one plumbs in the proper information, it will provide a direct road-by-road demonstration of how to get from here to there. We can all agree, I think, that CAP reform is vital and that much more needs to be done.
	In that context, we should note that, in 2003, the Government endorsed the financing arrangements for the CAP, which would remain unchanged until 2013. I have some sympathy for the Prime Minister because on that occasion he was bounced. By the time he arrived at the summit, Messrs. Schroeder and Chirac had arrived at an accommodation, shall we say, that they were determined to press through.
	Doha has already been mentioned by myself a few moments ago and by the right hon. Member for Richmond, Yorks. In the White Paper, "The UK Presidency of the European Union", let me remind the House of what the Government said under the heading, "Prospects for the EU in 2005":
	"The UK will play a key role in moving the Doha trade round negotiations forward . . . to ensure a successful outcome at Hong Kong . . . which helps to deliver a freer and fairer global trading system."
	The Foreign Office website established for the purpose of the presidency claims that one of the priorities is to
	"demonstrate clear progress in breaking down barriers to trade".
	Even on the most generous analysis of the Government's position, those objectives will clearly not have been achieved within this presidency.
	We had some amusement at the expense of the Conservative party a little earlier. Looking around, I suspect that not all of us remember Sir Robert Atkins. Let us describe him as a former hon. Member with direct and robust views and a man of considerable political acuity. It is remarkable how reputations can improve as soon as one has left and gone elsewhere. I cannot do other than refer again to the quotation attributed to Sir Robert:
	"We would find ourselves in the company of The League of Polish Families (racist and Europhobic), the Danish People's Party (Iain Duncan Smith banned us from even talking to them!)"—
	they must have been pretty Eurosceptic for the then leader of the Conservative party to have thought that his colleagues should not talk to them—
	"the Italian Fascist Party, and of course UKIP. This is a pretty unappealing ragbag of fringe politicians".
	Struan Stevenson, a Scottish Conservative MEP, said:
	"We would have to sit round the table on a weekly basis with these fascists and nutters that nobody else will sit with".

William Cash: rose—

Menzies Campbell: I wish to develop the theme. I am sure that Struan Stevenson would be happy to sit around the same table as the hon. Member for Stone. It suggests to me that the first task of the right hon. Member for Richmond, Yorks—to persuade these men of foresight and common sense to change their view—will prove formidable. We look forward to hearing reports on his success in that respect. Then our old friend, the right hon. and learned Member for Rushcliffe (Mr. Clarke)—unhappily, he is not in his place on this occasion—used words such as "headbanging", which suggests that his appetite for Europe has not been diminished by his relative failure in the leadership contest for his party.

William Cash: I think that the right hon. and learned Gentleman and others—I heard one of his colleagues onthe "Today" programme this morning—are misunderstanding the arguments that are emerging, albeit slowly, about the future shape of Europe and the need for serious reforms in the interest of individual member states and perhaps of Europe as a whole. I believe that there will be a change in the words used to characterise people such as myself who have taken a view—that we should reject the idea of an all-embracing European constitution and reject centralisation—that was previously described as "nutty". That viewpoint is now gaining much greater purchase, and there will be further changes in other member states.

Menzies Campbell: Let me say straight away that I do not regard, and never have regarded, the hon. Gentleman as nutty. He takes a particular view of Europe that I do not share, but I admire the fact that he has not departed from that view and that he takes every opportunity to advance it. Also, he never joined UKIP, which, if I may say so, is a clear indication that he does not fall under the category of nuttiness or anything similar. It is clear, however, that those who represent his party's interests in the European Parliament are going to need an awful lot of persuading that they should not associate with the conservatives of the EU countries. If I may say so, I was impressed by what the Foreign Secretary had to say about the national interest, as reflected in an article written by my hon. Friend the Member for Eastleigh (Chris Huhne) in one of this morning's broadsheet newspapers.
	Let me finish on the bright spot of Turkey and Croatia, which I believe represent a substantial achievement on the Government's part. There will be difficulties and the Turkish Government and people must understand that, however strong the advocacy of the US on their behalf, the Copenhagen criteria must be met. They must be met, furthermore, not just in letter or form, but in substance. The EU cannot and should not reduce its standards, however politically desirable it may be to bring in the first Muslim country. There can be no doubt, however, that what has happened is a substantial achievement by the Government, so the Foreign Secretary and the Minister for Europe most certainly deserve recognition.
	I also want to mention briefly the more open attitude towards the Balkan states. Let us remind ourselves that when the former Yugoslavia broke up, the constituent parts were necessarily outside the European Union. They were outside of it because of political and historical events. The former Yugoslavia imploded with all the devastation—including Srebrenica, where perhaps 200,000 people were killed—that came with it. I venture to suggest that had those countries been members of the EU, much of that terrible bloodshed would not have taken place. Slowly and painfully, not always immediately successfully, these constituent parts of the former Yugoslavia are coming to a better understanding and realisation of democratic institutions and tolerance. Unfortunately, tolerance is not always evident: 18 months ago, Kosovo provided a glaring and unpleasant example.
	As long as these countries have the prospect of becoming members of the European Union, it seems to me that they have a much better chance of achieving the levels of stability, conformity with the rule of law and democratic institutions that are necessary. The stimulus and inducement of EU membership is extremely significant. We talk about the details of the budget that are so important to us because we are members. They have an impact on our financial circumstances and our economic opportunities. However, we should remember that a much larger prize, in many ways, remains to be achieved—the continuing enlargement of the EU in order to provide a bulwark for democracy in a part of the world that went to war three times in 100 years.

Hugh Bayley: The forthcoming EU summit is clearly in our minds, but the purpose of politics is not just to deal with the here and now; it is also to think and plan strategically about the welfare of our country and of future generations—our children and grandchildren. We need to face up to the fact that the EU's long-term economic prospects are poor.
	Compared with the US, China or India, our competitiveness is falling quite sharply. We have the problems of an ageing and shrinking population and underfunded pension systems. The European Commission estimates that, by the middle of this century, the UK's share of world gross domestic product will have halved. Goldman Sachs has said that the EU's relative decline will be even greater, and that our share of global GDP will fall by something like two thirds.
	Therefore, if we want to survive as a major player in world markets and retain a strategic role in global affairs—in respect of climate change, peace and security and combating terrorism, for instance—we need to set in train urgent and radical reform of our national economies. We need to invest more, especially in science and technology, to increase our productivity and competitiveness, and to create new products, and especially new services, to sell in world markets. We need to save more, especially to fund an ageing population in retirement. We need to continue to reduce the costs of doing business, and to pursue energetic welfare-to-work policies.
	The UK has taken a lead in Europe on all those policies. That is why our economy is performing better than other EU economies. It is why our growth rate has been higher in recent years, and why our unemployment rate is significantly lower.
	In a rapidly globalising world, few problems can be solved by one country acting alone. The economic challenges that I have described cannot be solved within the boundaries of our country. The right hon. and learned Member for North-East Fife (Sir Menzies Campbell) spoke eloquently about the need for trade reform, and there are other problems that can be addressed only in partnership with other countries, including the quest for environmental sustainability, international migration, immigration and asylum, organised crime, the international drugs trade and terrorism.
	We therefore need to co-operate internationally, not least with the other EU states. On this morning's "Today" programme, I heard a Conservative MEP bemoan the fact that the EU has the competence to negotiate on the UK's behalf in the World Trade Organisation, and that it is Peter Mandelson rather than the Secretary of State for Trade and Industry who represents the UK's interests. The MEP made the case that UK trade policies are more progressive and would be more likely to achieve agreement in the WTO than the compromise position proposed by Commissioner Mandelson. That is to ignore the fact that the WTO works on the basis of unanimity, and that if one country in the EU can veto CAP reform and the reduction of agricultural subsidies, so can one country in the WTO.
	I believe that the CAP is the stumbling block when it comes to making substantial progress in the development dimension of the current WTO round, and that it must be changed. Separating our trade representation from Europe would not help us to reform the common agricultural policy, as that must be done within Europe. All of that means that backing away from Europe is not the solution. We need the EU to deal with the global problems that I have set out, but we need a reformed, modernised and more effective EU that is fit for the 21st century.
	First of all, we should begin by reforming the EU budget. I believe that the Government are right to press for a reduction in overall EU spending. We need to reinin state spending to improve our economic competitiveness in respect of emerging economies such as China, India and Brazil, and in relation to the US.
	Secondly, the Government are right to agree to pay towards the costs of structural reform in the 10 new EU member states. Those reforms will make those states richer, and us richer too. That is what has happened with every EU enlargement to date. The resources that the EU put into Greece, Spain and Portugal made those countries and all other member states richer, because we trade with one another and our economies are interdependent.
	However, I do not believe that my right hon. Friend the Prime Minister's proposal to reduce the overall budget slightly will impede aid needed for the new EU member states. The Financial Times reported today that, in the first two years since its accession, Poland has been allocated €8.6 billion in structural funds but that to date it has spent only 4.3 per cent. of that amount and has committed only about 50 per cent. of it. The newspaper also said that, so far, the Czech Republic has spent only 2.6 per cent. of the €1.7 billion that it has been allocated. The accession countries will therefore get the money that they need to carry out the necessary structural reforms even under the slightly reduced overall budget that the UK proposes.
	Thirdly, the UK is right to propose changing the EU rebate, because circumstances have changed. All 10 new member states have much lower average incomes than the UK, and eight have emerged from the shadow of communism. I have many disagreements with Margaret Thatcher, but she was nevertheless a tough and determined opponent of communism. She wanted to free states from the dictatorship under which they existed. That was because she believed in freedom, not because she wanted them to pay a rebate to the UK Treasury. She was not fighting to ensure that Estonia, Latvia, Poland and the Czech Republic would subsidise the UK.
	In his youth, the right hon. Member for Richmond, Yorks (Mr. Hague) was a passionate admirer and supporter of Margaret Thatcher, so I am sorry that he should seem to fudge on the question of whether the accession states should make a contribution to the UK rebate. Our Government are right to say that that burden should not fall on them.
	Another way in which circumstances have changed since 1984, when the rebate was agreed by EU member states, is that the UK is much more prosperous now. In 1984, unemployment stood at 3,298,000, or 12.1 per cent. of the work force. On the same measure, it has now fallen to 4.9 per cent. The UK average income, or GDP per capita, was £5,750 in 1984, but now it is £19,537. Even adjusting for inflation, that represents a real-terms increase of 62 per cent.
	I looked this morning at the report in the Financial Times of the 1984 EU summit when the rebate was agreed. It said:
	"the one-nation deal for the UK is based on an explicit acknowledgement that it is a relatively poor member state".
	In relative terms, the UK was poor then, but it is not now. Average incomes here are higher than in Germany, France, Italy or Belgium.
	Fourthly, the Government are right to say that we will not abandon the rebate without reform of the CAP. The CAP is bad for families: according to a recent parliamentary answer, the average family of four would save £5 a week on food if the CAP were scrapped. The CAP is also bad for taxpayers: to that average family of four, the cost of CAP subsidies amounts to a further £3 or £4 a week. That means that the CAP leaves the average family worse off by nearly £10 a week. The CAP is also bad for the EU because it is a totally perverse misuse of its overall resources: 40 per cent. of EU spending goes on the CAP, whereas 5 per cent. of the EU's population works in agriculture and produces only 2 per cent. of the EU's output.
	CAP reform is necessary to remove a roadblock in the way of progress in the WTO negotiations. It is necessary for global trade justice, and it is a precondition for the economic reform that the EU needs to make to secure our own future prosperity. Oxford Economic Forecasting calculates that the EU's GDP could be boosted by €200 billion a year, which would create hundreds of thousands of new jobs in the EU, if CAP subsidies were ended and EU tariffs were cut.
	It is necessary not just to reform the CAP; perhaps the Minister can also ensure that the UK team takes to the summit the need to reduce tariffs. We have tariffs of more than 100 per cent. on many foodstuffs: 170 per cent. on lamb, 120 or 130 per cent. on beef and 100 per cent. on rice. It is utterly absurd to impose that burden on consumers in the EU, particularly on those in this country, which is such a large net food importer. We in the UK alone would benefit by £20 billion a year—about £1,500 per family of four—if that economic liberalisation, the abandonment of the CAP and a reduction in tariffs were made. Developing countries would gain at least twice as much as a proportionate of their national income as we would in the EU.

David Gauke: The report to which the hon. Gentleman refers and the benefits for the average family in the UK are absolutely right, but the people who would gain most proportionately would be those in the poorest 10 per cent. of society. Trade liberalisation would benefit the poorest the most.

Hugh Bayley: Yes, that is true globally, and it is certainly true in this country. If I remember rightly, the figures in the report suggested that the poorest 10 per cent. of families would see an increase in their average income of about 3.5 per cent., whereas the richest 10 per cent. would see an increase in their income of about 0.5 per cent. If we were to make those changes, it would be good for social justice in Britain, and it would be good for global social justice, too.
	The real importance of a rebate is not the reduction that it makes in the UK's net contribution to the EU, but the incentive that it provides to reform the CAP. To return to the Financial Times report of the Fontainebleau summit in June 1984, when the rebate was agreed, it said:
	"The real impact of a budgetary deal will be critically dependent on parallel steps to impose tighter control over Community spending, and to reduce the share going on agriculture. If the Community can, over time, substantially reduce the farm burden, Britain's gross budgetary transfer should also decline."
	The way for the EU to get rid of a rebate is to get rid of the cause of the rebate.

Robert Walter: I share the hon. Gentleman's passion for CAP reform—he and I both served on the International Development Committee for a number of years—and he has made an eloquent case for reducing the tariff barriers, but does he share the concern of those who suggest that the subsidies could be paid by national Governments rather than by the EU? Would that not just simply compound the problem? We are trying to get rid of a subsidy regime. To transfer it to national Governments would be self-defeating.

Hugh Bayley: The hon. Gentleman has moved on to greater things, but as a continuing member of the International Development Committee I went to Brussels to meet the Commission last week. We met the Agriculture Commissioner, and I can tell the hon. Gentleman that the idea of converting the agriculture subsidies into a call on national Government spending, rather than the EU budget, gets no support whatsoever from the Commission. Whatever the merits or otherwise of such a change, it is not one that will happen under this Commission presidency.
	I do not know what the outcome on the budget will be at this week's summit—it may end in deadlock because of a French "non" to change in the CAP—but I have little doubt that the final budget package, when agreed, will be close to the UK's proposal. I expect that it will contain substantial support for the 10 new member states. It will include a slight reduction in the overall budget and an agreement to review the CAP earlier than the current deadline of 2013. So I say to the Government, "Stick to your guns." The EU needs to reform not only its spending, especially on the CAP, but its contribution system. Although I do not expect progress to be made on the latter this weekend, tax systems generally are seen to be fairer—they are certainly better understood and more transparent—if they are simpler.
	At the moment, there is an overlapping matrix of four main income streams for the EU. We should move to a much simpler system, whereby all the income derives from the source that a majority of it comes from now: a simple proportion of gross national income. Then people in this country would feel that they were being treated fairly, alongside those in Germany, France, the Czech Republic or Latvia. That would not make a huge difference to the overall budget, but it would become much more understandable. I have asked the Library to generate some figures on such a system. It would produce some marginal benefits for the UK, but it would produce a system that would be much fairer overall and seen to be so by people throughout the EU.

David Heathcoat-Amory: I am pleased that the hon. Member for City of York (Hugh Bayley) introduced the subject of the European economy and financial and economic performance into the debate, although I draw the opposite conclusion. I believe that economic success goes to self-governing countries that possess their own fiscal, monetary and trade policies. There are dangers in membership of a large bloc if that large organisation pursues anti-competitive practices. Unfortunately, the EU is largely discredited as an economic model for the world to emulate. We are paying a heavy price for that already.
	The Chancellor of the Exchequer occasionally expresses admiration for the United States economy and enterprise, but he, the Treasury and the Government are converging not on the US model but on a European model that is characterised by high unemployment, high taxation and a high regulatory burden. That should form the basis of the discussion at the forthcoming summit that will take place at the end of this week, instead of which we have got bogged down in a series of quarrels and it is difficult to expect that anything positive will come out of it.
	A positive development in the debate has been the return to front-line politics of my right hon. Friend the Member for Richmond, Yorks (Mr. Hague). That was certainly a benefit of the recent leadership election. I wish him well in his endeavours. I contrast his contribution with those of not just the Foreign Secretary, but all Government Members, who have talked endlessly about reform that is not happening.
	In fact, it is striking that almost no hon. Member even tries to stand up for the EU as it is; they talk instead of the possibility of reform, but we have had the reform process. I was part of it—it was called the European Convention—and the organisation that met for nearly two years in Brussels, chaired by ex-President Giscard d'Estaing of France, was given a very wide remit indeed. Instead of tackling reform, the Convention wrote a constitution that gave more power to the very European institutions that had created the problem in the first place. The public's sense of alienation and disillusionment has got worse since 2001 when the Convention came into being. There was no sign in the Foreign Secretary's contribution this afternoon that he had grasped the scale of the reform that is needed.

Mark Hendrick: The right hon. Gentleman will be aware that there have been reforms, although obviously not on the scale that we would like. For example, the CAP has been reduced from 66 to 40 per cent. of the budget over 10 years, and between £3.5 billion and £4 billion has been knocked off the CAP due to recent reforms to the sugar regime during our presidency. He does not give credit where it is due.

David Heathcoat-Amory: Those are trivial and peripheral changes. I am talking about the need for deep-seated structural reform of the European Union, as signalled in the Laeken declaration of December 2001, when it was asserted that Europe stood at a crossroads. It was said that Europe was behaving too bureaucratically and referred to the gap between the leaders of Europe and the led. It called for more democracy and simplification. None of that was done.
	The Government tabled about 200 amendments, only a handful of which were accepted. They almost immediately gave up on the concept of the constitution. Originally, the Prime Minister said that he did not want a constitution, but he retreated from that when it became inevitable. He gave up, too, on his promise not to make legally binding the EU charter of fundamental rights. Then he actually signed the constitution. He cannot have believed in large chunks of it, because we return occasionally to the Government's unsuccessful amendments, but we now know that the constitution was turned down not by the politicians of Europe but by the people. The Government failed to take advantage of that reform process. The entire process was a failure, so it is not good enough to say, in the dying days of the British presidency, that the Government stand for reform.
	The same process—talking tough in advance and then giving way—is apparent in the question of the budget. The Prime Minister gave explicit and unambiguous assurances at the Dispatch Box that were simply forgotten. I shall not repeat the process eloquently outlined by my right hon. Friend the Member for Richmond, Yorks, who showed how the Government started by saying that the rebate was justified and would not be given up in any circumstances. Then they said it would be given up in return for CAP reform and then in return for talk of CAP reform. Now they say that it will be given up with no CAP reform.
	The present budget is indefensible and, as long as that situation endures, we must not give up our only real lever for reform—the British rebate. This year, this country is giving more than £4 billion net to a European budget whose accounting system is pre-15th century. The former chief accountant of the EU, Marta Andreasen, discovered that the Commission did not even use double-entry bookkeeping, which was invented in Venice in the 15th century, as I know because I am a chartered accountant. It was a European invention, butit has not yet reached Brussels. Into that unreconstructed, unreformed accounting system, where the auditors have refused to sign off the books for the past 11 years, we pay a net amount of more than £4 billion.
	During the debate, it has been said that the poorer countries of the east need that money. In fact, they joined under the present system not to obtain handouts but to exert a comparative advantage in a free market, as well as for the supposed political and security advantages. They did not join for an endless stream of cash transfers. They are not by any means the poorest countries of the world, but if there is a case for helping the poorer countries of the east and one accepts that obligation, it would be far better not to meet it by filtering money through the most inefficient and corrupt accounting system in the western world.
	The same is true about our structural funding and the CAP. Indeed, several Members have said that we need the structural funds. We represent different parts of the UK, some of which are in receipt of structural funds, but for every £2 we pay into the EU budget, we only receive back just over £1. That is a bad bargain. If we really want to look after our farmers and those in receipt of structural funds, it would be much easier, and certainly more efficient and better for the taxpayer, if we repatriated that money. Indeed, the Chancellor of the Exchequer advanced the proposition that we should repatriate structural funding.

Chris Bryant: I thank the right hon. Gentleman for giving way, not least because I was not in the Chamber for the last couple of speeches, for which I apologise.
	The right hon. Gentleman thinks that the CAP should be repatriated, so does he believe that every country in Europe should be free to do whatever it wants in terms of agricultural subsidies? Would not that be counter-productive for developing fair trade for poorer nations?

David Heathcoat-Amory: I shall return to fair trade at the end of my remarks. Meanwhile, I merely observe that there could be a common policy, but the funding could be repatriated. People in this country do not resent paying money to British farmers. I represent an agricultural constituency and I should also declare an interest in that I have a partnership farm, so I receive some CAP funding. The resentment is not that we pay for our own farmers but that we pay for everybody else's in Europe.

Angus Robertson: I apologise to the right hon. Gentleman for not being in the Chamber for the beginning his speech. Like other members of the European Scrutiny Committee, we were unable to be here for the start of this important debate.
	Does the right hon. Gentleman agree that it is time to look at repatriation of the common fisheries policy? Could he clarify the position of the Conservative party under its new leader? Does the CFP remain Conservative policy and will the Conservatives apologise for signing us up to it in the first place?

David Heathcoat-Amory: One of the minor scandals of the European constitution is that it entrenched and formalised a common fisheries policy that is bad not just for fishermen but for fish. Occasionally, I visit Iceland where I have seen the advantages to all concerned of the concept of stewardship. Those who own and control their own waters tend to look after their fishery resources, but when there is a common policy everybody tries to get what they want. That is intensely bureaucratic, bad for the environment and bad for the livelihoods of our fishermen. Enormous changes are required, but all the changes that have been made were in the wrong direction. In the constitution, the Government tried to give whole CFP away.
	I want to advance a wider truth and put a wider question. Why is the cornerstone of our foreign policy—the EU—such a nightmare to deal with for all Governments? When the Government go to the next European summit, all they can hope for is to avoid damage. They never go to summits with the hope of changing the world for the better; it is all about fighting a desperate battle to preserve what remains of our self-government, to stop too many advances on our criminal justice, foreign policy and defence. We are fighting a losing battle.
	As my right hon. Friend the Member for Richmond, Yorks said, the European constitution is already being implemented by the back door, by manipulating the existing treaty base in collusion with the European Court of Justice. He gave an example of how a recent court case will allow criminal justice matters to be spread right across member states, even if those member states' Governments disagree. The situation is in fact worse than that. The court case signals the fact that future environmental and other directives will require criminal penalties. Even if the directives are agreed by majority voting, as they will be, member states that vote against them will have those criminal penalties imposed in their domestic jurisdictions. There can be no clearer example of the way in which the House of Commons or another national Parliament will lose control of the most precious, basic and central power: imprisoning or fining citizens and electors.
	It was explicit in the European constitution that the power was to be given away. The constitution was turned down by referendums in other member states, but exactly the same measure is being introduced by the back door by manipulating the existing treaty base. That matter should be on the agenda of the summit at the end of the week. We should defend British interests against the encroachment of an expansive jurisdiction. It tells us something about the entire process of the European Union that the best for which Ministers can hope is to avoid further damage.
	With member states freed from the temporary and perhaps artificial unity of trying to create a European constitution, the real and deep-rooted differences in the European Union are becoming clearer. We have debated the budget this afternoon and I want to mention trade. We have had a year of making poverty history. The cause has mobilised enormous numbers of our constituents, who know that among the best things that we can do for the poorest countries of the world is to help them to get a bigger share of world trade. In fact, small increases in trade share do more good than a lot more aid.
	The paradox is that this country does not have a trade policy—we have given it away. Of the eight Ministers in the Department of Trade and Industry, only one deals with trade, and he is shared with the Foreign Office. There is half a ministerial job in the DTI dealing with trade. We have simply disarmed. We have no expertise on trade. We have sub-contracted the whole thing to the European Commission and our ex-colleague, Peter Mandelson, who is not really a negotiator, but more an impresario who is trying to synthesise an agreed position between the French protectionist ideology and what is loosely called the Anglo-Saxon, or liberal trading, position of the United Kingdom. He is failing to reconcile our interests with those of the French, but the victims are the poor: the poor in our country who could do so much better if we could import things more cheaply and consumer prices could be brought down thereby and, most importantly, the poor and the poorest in the developing world.
	Think what we could do if we were in charge of our own trade policy. We could import immediately goods and products that the developing world produces. There would not be competition with our farmers because we do not grow bananas and oranges in this country. We could import the goods from poor countries free from tariffs and protection, which would be to their advantage and ours. However, that is illegal. It is against treaty law because the European Union, to use its jargon, has an exclusive competence over trade policy. It is not only our interests that are being betrayed, but the interests of the poorest people in the world.

Nicholas Clegg: The right hon. Gentleman speaks eloquently about the virtue of trade liberalisation as a way to help developing countries. Indeed, his party leader touched on the same theme earlier today. Will the right hon. Gentleman explain then why, when a French Trade Commissioner, who was the predecessor to the present Trade Commissioner, unveiled perhaps the most ambitious proposal on trade liberalisation for the benefit of developing countries—the "Everything but Arms" initiative, which was designed to allow total duty-free trade of products from the 46 poorest countries in the world—Conservative Members of the European Parliament resisted the measure on the ground that they wished to protect sugar farmers in this country? Rhetoric is easy, but when will the Conservative party put that rhetoric into practice?

David Heathcoat-Amory: I do not accept that. The Conservative party has a long and honourable record of fighting for free trade, as, I concede, did the old Liberal party. My family were all members of the Liberal party up to the second world war, partly because we were free traders. We were in manufacturing and we took on the landowners and feudal interests in these days. We fought to do away with the corn laws, and, indeed, we were helped by the ancestors of my hon. Friend the Member for Stone (Mr. Cash). We fought together on the matter, so it is sad that the old Liberal party is unrecognisably represented in the Liberal Democrats of today. I do not accept the strictures of the hon. Member for Sheffield, Hallam (Mr. Clegg). I have always believed that free trade benefits the poor, especially. It is a scandal and a shame that we have no means—political or legal—to exert such influence in the wider world because we have given up powers to another jurisdiction.

Hugh Bayley: Does the right hon. Gentleman seriously think that we would be more likely to get a deal in the World Trade Organisation if each EU member state were represented by its own Trade Minister? By pooling the policy, France has to give a bit. For example, it had to make the concession of agreeing to the phasing out of export subsidies, but that would not have happened if France had been acting alone. The world trade negotiations would have been even more deadlocked than they are now.

David Heathcoat-Amory: We have heard about the ambition of reforming the CAP for decades. The European Union is incapable of reform—I know, because I tried to achieve it. National Governments can change, and a change of Government leads to a change in policy. No changes are possible in the European Union because it is a bureaucracy that is immune to reform. The CAP is the vestige, albeit an important one, of that immunity to reform.
	I end my speech by making an observation about Britain's place in the world. The Government have not addressed the question of where we stand in the world. It is true that we are in part a European continental country and we play our role as such. However, General de Gaulle said more than 40 years ago that Britain is an insular, maritime country with instincts and traditions that differ profoundly from those of the continentals. That is a profound truth. Our global links, language, pattern of trade and legal system mean that we are not just a continental country. We have links with what de Gaulle called the maritime parts of the world, although I think that they would now be called global links. Technology, the unassailable position of the English language and what has been called the death of distance have strengthened those global links and the global pull in many ways. However, the European Union—especially through the euro in the financial field and the European constitution in the political field—was and is an attempt to park us permanently in a continental situation. That defies our national character, along with our traditions, history and instincts. I believe that that is understood on the Opposition Benches. There is no inkling that the Foreign Secretary or the Government have even addressed these issues. These are the matters that they should be discussing in the coming days. They will be discussed by the Conservative party on its return to office.

Mike Gapes: It is unfortunate that the Government's revised proposals for the financial perspective 2007–13 were not available yesterday. My right hon. Friend the Foreign Secretary came before the Foreign Affairs Select Committee yesterday afternoon, but regrettably we did not have an opportunity to go through the revised proposals in detail. I have now been able to read them—

Angus Robertson: Will the hon. Gentleman give way.

Mike Gapes: No, not yet. I will give way later. Please let me make some progress.
	I have read the proposals in some detail. I am interested that the position to which the Government have come does not substantially change in the main area that I want to talk about, and that is that we now have 14 EU missions under the common foreign and security policy. That is seven more missions than when Britain began its EU presidency. There is a requirement—there is a proposal within the initial Commission proposal and within the Government's proposal—for a significant increase in funding for common foreign and security policy missions within the EU. My concern is that if we do not get an agreement in the next few days, there will be big question marks about the sustainability and long-term role of many of the important EU developments and activities throughout the world.

Angus Robertson: The hon. Gentleman knows my particular interest in the south Caucasus. To raise the issue of joined-up Government, does he feel that it is regrettable that the Government have cut their funding of conciliation resources for that part of the world, the south Caucasus, before the EU takes up the reins as part of the European near neighbourhood policy? Does he agree that that is a profound lack of joined-up Government in what is an important agenda on improving human rights and democracy in the south Caucasus and elsewhere?

Mike Gapes: I will come on to regions of conflict—I think that there was an Adjournment debate on the issue in Westminster Hall, although I do not recollect everything that was said. Perhaps hon. Members will read the report of the debate in coming days.
	The 14 missions to which I refer include a military operation in Bosnia and Herzegovina and a police mission there; a police mission in the former Yugoslav Republic in Macedonia; a police mission in Kinshasha in the Democratic Republic of Congo; the so-called rule of law mission for Iraq, which is involved in some of the training and activities that are taking place outside Iraq but in relation to Iraq; the mission in the Congo, which is a security mission and in addition to the police mission that I have mentioned; the mission for support for the Africa Union in Darfur; the Aceh monitoring mission in Indonesia, which has been playing an important role; and a police mission to Palestine—which I, with other members of the Select Committee visited two weeks ago when we were at the Rafah crossing. We saw the carabinieri who are in charge of that mission, together with Romanian and Danish police officers, doing a fantastic and vital job in opening up Gaza for trade with Egypt, and potentially leading to the beginnings of viability for a Palestinian state. The members of the Select Committee were very impressed by the work that the EU is doing there.
	There is also the border control assistance mission in Moldova. It is important because in, perhaps, two years Romania and Moldova will be the border of the EU. We know that Moldova is a conduit for people smuggling and other crimes, including drug smuggling. We have a European-wide security interest in the success of such missions.
	Many bad things have been said about the EU; many criticisms have been made. I want to be more positive, because in all the difficult areas that I mentioned the EU has been playing a positive role inconflict resolution, conflict prevention and reconstruction. Why is the EU at Rafah? The answer is that the Americans did not wish to do the job. There needed to be a consistent long-term commitment. The EU now has the beginnings of the ability to act in the interests of peace and security throughout the world as a whole, without worrying only about subsidies to agriculture or contributions to the budget.
	Having listened to the remarks of the right hon. Member for Richmond, Yorks (Mr. Hague), one would think that everything about the EU is terrible— that it is declining and failing. Why, therefore, have 10 countries recently chosen to join the enlarged EU? Why do Bulgaria, Romania, Croatia and Turkey wish to join? Why do countries in north Africa and around the Mediterranean seek association agreements? Some countries want to join the EU even though they are not in Europe. Why do people in Ukraine and other countries regard the EU as the way forward on democracy, human rights, economic development and pluralism? The EU is magnet and a beacon for many other countries.
	Although people with mid-Atlantic views think otherwise, the EU is important to Britain's foreign policy. Through our work in the EU we can play a vital role in developing policy and gaining international support and allies, just as we do through the Commonwealth and our membership of the UN Security Council. It is not a choice between being an Atlanticist or being a European—it has always been in Britain's best interests to have good relations on both sides, as Sir Winston Churchill recognised when he was Prime Minister and subsequently.

Peter Bone: The hon. Gentleman has made some powerful points, but when he spoke about countries that want to join the EU, he was in fact talking about the Governments of those countries. There were no referendums in Bulgaria and Romania to find out what the people thought, but opinion polls showed that they were against membership.

Mike Gapes: We must wait to see what happens with Bulgaria and Romania as they have not yet joined the EU. In central and eastern European countries that held referendums before they joined, there was overwhelming support for membership. In countries throughout central and eastern Europe, apart from some extreme left and right wingers, there is a vast consensus in favour of EU membership. People may not agree with every aspect of policy—some of them, particularly in Polish agriculture, have received a sudden wake-up call about the need to change and reform agricultural policy. Nevertheless, the younger generation and people who look to the future rather than live in the past accept that the EU is a magnet for those countries and is the way forward. Having said that we wanted to end the cold war divisions of our continent, and as we believe that we should work together and co-operate as a single Europe, we would do ourselves and the rest of the continent a great disservice if we reneged on our commitment to current and future enlargement.

Robert Walter: The hon. Gentleman spent the first eight minutes of his speech talking about various European security and defence policy operations. Does he think that the enthusiasm of some countries for the 14 missions is connected to the fact that those missions are second-pillar operations and are intergovernmental in nature? The European Commission is not involved in any of them and the European Parliament does not have competence in that area. He mentioned the mission to Bosnia—Operation Althea. One of the largest contributors to that mission is Turkey, which is an applicant state and not yet an EU member. Several other states, including Ukraine, were involved in those missions.

Mike Gapes: I welcome the fact that non-EU member states have co-operated with the EU in a number of those missions. I welcome, too, the fact that the old theological argument about NATO or the EU has been resolved. It was important that SFOR in Bosnia and Herzegovina was transformed into EUFOR relatively smoothly, with German concerns about national caveats and so on being resolved. In time, the EU may play a greater role in parts of the world from which the United States chooses to step back.
	I am not saying that the EU will be in Afghanistan instead of NATO, but we are at the point where European Union countries and other countries—the hon. Gentleman mentioned Ukraine and Turkey, but there are others—can work together in policing, monitoring and even military operations, as we have seen them do successfully in Africa and other parts of the world. There is nothing wrong with that.

Chris Bryant: Is there not another point that we could draw from the instance in Bosnia? The old theology of a divide between NATO and Europe is a false one, as my hon. Friend said—witness the fact that Swedish forces are operating alongside British forces in Bosnia, and there are also Swiss forces operating there. The British forces would not have been able to operate very effectively over the past six months without Swiss Cougar helicopters taking them around. However, is not the more important point that in the future it is likely that British forces will rarely work on their own? Consequently, the more closely we can integrate our operations with EU allies, the better.

Mike Gapes: That is already happening. There are not many EU countries—in fact, only ourselves and the French—who can carry out the gamut of defence activities. There are arguments that certain of our EU partners need to do far more on their defence budgets and their commitment to security. In particular, I hope that the new German Government will review their commitments. By relying on just a few European countries, we cannot deal with the many problems, especially in a world where the United States is reluctant to be engaged or feels that it is already over-committed elsewhere. We need others to be involved and to provide a breadth of support. Such co-operation is working and many examples can be quoted.
	There are potential problems. I spoke about enlargement, and it is reported that French Government officials are saying that future enlargement will not go ahead if there is not financial support for it. That is code for, "Don't mess around with the budget. Give us more resources, otherwise we will block Macedonia and potentially Turkey". They have some difficulty with the fact that we were so successful at the opening of the accession negotiations on 3 October.
	We in the UK must maintain our unity and consensus about future enlargement. I have been encouraged by the remarks about the need for further widening and enlarging of the EU. Whatever changes the Conservative party undergoes in its 18-month reflection period, I hope that it will not go back on the commitment to enlargement and the accession of Turkey.

David Heathcoat-Amory: Does the hon. Gentleman agree that, realistically, Turkey is not likely to join the European Union because President Chirac, in an unsuccessful attempt to buy support for the European constitution, conceded a referendum, and something similar has been done in Austria? Turkish membership is popular among politicians, but not among the people of those countries. I am afraid that Turkey is being led up the garden path and is very likely to be disappointed.

Mike Gapes: There have been great changes in Turkey in the past four or five years. The prospect of EU membership will, I suspect, lead to even greater changes. Nobody is saying that Turkish membership of the EU will occur in the next five, seven or even 10 years, so let us wait and see where we are when that referendum takes place, if it takes place. President Chirac will be long gone by the time Turkey joins the EU.

Angus Robertson: On a related point, is the hon. Gentleman aware of a report that is being drawn up for the European Parliament about the future of the European constitution? It is being prepared by Andrew Duff of the UK Liberal Democrats, together with Johannes Voggenhuber of the Greens, and it is believed that they will recommend that a constitution should be in place in the EU before Turkey could ever accede. Does the hon. Gentleman agree that that would put Turkey's membership in the medium or long term in severe doubt, because we will not have a constitution in the form that has been presented to us over recent months and years?

Mike Gapes: I am not aware of that report, but I shall try to find out what it says.
	My hon. Friend the Member for City of York (Hugh Bayley) has spent some time discussing trade and the importance of progress at the negotiations in Hong Kong, which relate to important issues such as the common agricultural policy, US farm subsidies and other international difficulties. It would be absurd if we were to discuss the repatriation of negotiations on trade. The only reason why we, as Europeans, could stand up to the United States when it introduced its illegal and unjustified steel restrictions was because we, as Europeans, were collectively strong enough to take them on.
	I do not want a world in which one country, the US, or perhaps two countries, the US and China, totally dominate all the small countries because of their weight in the global economy. There should be a multi-polar negotiating structure that involves trading blocs which are strong enough to resist the most dominant and the most powerful, whether that is the existing great power, the United States, or the coming great power, China, which will dominate the east Asia region. As Europeans, we will be extremely vulnerable if we allow our internal divisions to reduce our ability to negotiate and stand up for our interests in future trade talks.

Kelvin Hopkins: My hon. Friend has discussed internal divisions. Would we not have a much friendlier Europe if we did not have the CAP, which causes all the problems?

Mike Gapes: I am not a fan of the CAP. I represent an entirely urban constituency, which does not even contain a city farm, so I have no interest in my constituents consuming food that costs significantly more than it would had it been bought on the world markets. I also have a commitment to developing countries, and the CAP and related regimes have caused great damage to many poor people in poor countries around the world. However, the aspiration to get rid of the CAP does not mean that it will go, and we must work hard to achieve that objective over the coming years, which is why it is important that the Government stand firm on their commitment to hold a review as soon as possible.
	In future, even less of the EU budget should be spent on the CAP. In recent years, there has been a welcome reduction in the percentage of the budget that goes on agricultural spending, but the perspectives for the next few years still mean that about 39 per cent. of the total budget will go under that heading, which is too much. The matter should be re-examined, because the CAP is not in the interests of Europe, the developing world or my constituents in Ilford, South, given the prices that they pay for imported food.

William Cash: In the course of today's debate, I have sensed a sea change, which is less obvious in some cases than others. I have participated in debates in this House for the past 20 years, and for the first time I have detected an element of realism, although it has not necessarily been reflected in the remarks by some of the more fanatical members of the Europhile contingent.
	Enlargement, which I have always supported, and the idea of co-operation in Europe, which I have also always supported, are producing their own consequences. It is apparent and clear, irrespective of whether any of us went to France during the French referendum, that the French people decided against the constitution, and the Dutch decided against it, too, but nobody can claim responsibility for that.
	The fact remains that a substantial shift is taking place, even if it is not yet more than a tremor. There is an increasing recognition of the lack of democracy in the European Union. The argument is beginning to move to the question of whether, irrespective of the fate of the constitution, the existing treaties are adequate to deal with the dynamic that I described. I mentioned the best efforts of the Prime Minister, although that is not to say that I think that his best efforts are anything like good enough. I took the trouble to read his speech to the European Parliament and agreed with many of the sentiments that lay behind it.
	As I said in International Development questions the other day, I am extremely glad that the Government are taking a far more constructive view about the developing world. We see all the debates that are going on in Hong Kong and in the Doha round, and the attempts to reform the common agricultural policy in the interests of getting a proper balance between farmers in the developed world and those who are desperately and damagingly poverty stricken in Africa and other parts of the world.
	Yesterday, the European Court of Justice made a ruling—no doubt on the basis of some argument that had been put to it—gathering to itself the right to make decisions about the Marks and Spencer tax case. Cadbury-Schweppes is another such case. We need not go into the detail of that. Low growth and high unemployment are problems in France and Germany and in other parts of the eurozone.
	This realism is not born out of the so-called previous rantings of the Eurosceptic right. In the past, some have no doubt been prepared to point a finger at me, and perhaps even at my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory). I would say that there is no harm in looking at the record and asking who has been right over the past 15 or 20 years. It has been a shared operation by those who have persistently and consistently argued for a policy of Euro-realism. One extremely prominent new Labour Member of Parliament who is not that far from the Chancellor of the Exchequer said to me the other day in the Lobby, "Bill, you call it Euro-realism; we call it realism." Some of the policies that the Chancellor is putting forward show an understanding of the necessity for open markets and competitiveness.
	I have visited the countries of eastern and central Europe many times, and I have many friends there to whom I talk regularly. A few weeks ago, I had the pleasure of meeting some of them—they were from the Czech Republic—in this Parliament. They were social democrats, not from the centre right. They expressed their deep concern and disillusionment about overregulation in Europe, their discovery that their agriculture was being put under severe duress, the significant reduction in the amount of cultivated land in the Czech Republic because of the imposition of European quotas on products such as milk and sugar, and the fact that the Czech Republic had been self-sufficient in agricultural products before joining the EU, but was now a net importer of them.
	Anyone who heard me say that a few years ago might have remarked, "There they go again—Eurosceptics ranting on." However, I read the information from an informal note prepared by an official in a European Committee, who heard what was said and took careful notes. It is necessary to work towards the co-operation in Europe that I mentioned, bearing in mind the comments of my right hon. Friend the Member for Wells, with which I agree, that the way in which the acquis and the treaties are constructed and the institutions established does not admit of the sort of reform that we want, let alone what the Prime Minister wants. We have an increasing amount of realism and a greater dynamic towards making things right yet a problem that is inherent in the structures prevents the latter from happening.
	The right hon. and learned Member for North-East Fife (Sir Menzies Campbell) is right to say that the Prime Minister has failed in the EU recently but that is because he is hitting his head against a brick wall. It is no good talking to us about 68 proposals for deregulation. As my right hon. Friend the Member for Wells said, they mainly deal with accession agreements and matters that are defunct. If we are to make a difference to dynamism and enterprise for those countries that are in a proper relationship in the European continent, we must make sufficiently radical changes to ensure that something happens.

Christopher Huhne: Although progress has been glacially slow on reforming the CAP, there is nevertheless progress. How does the hon. Gentleman account for the fact that, when I first knew the CAP in the late 1970s, it took 78 per cent. of the EU budget and the figure is now 40 per cent.? I hope that he is prepared to concede that some progress on reform has been made.

William Cash: I concede that the percentages have changed as the hon. Gentleman described, but we are now at a watershed in Europe. There is therefore a need, which also applies in the context of the developing world and in the interests of efficiency, to ensure that the levels are brought even lower. Time will tell, but at this juncture President Chirac makes it abundantly clear that there will be no change. That has become inextricably bound with the problems of the rebate, which has got bogged down. We shall see what happens in the next few days.

Kelvin Hopkins: Much has been made of the falling proportion of the EU budget that the CAP consumes. However, the EU budget is much larger than when Britain joined and, viewed as a proportion of the EU's gross national income, agriculture is more costly than it was when we joined.

William Cash: The structure of the CAP is such that the sole legitimate governmental function is exercised by the European Union, as is also the case for trade, according to the legal arrangements laid down by the treaties. There is no reason on earth why we should not provide the necessary subsidies to our own farmers, or why we should not enter into proper trading relationships with other countries, if there were a tangible advantage in doing so. However, because we are hidebound by the treaty arrangements that created the common agricultural policy, the common fisheries policy and so on, we are unable to make those changes without breaking the law. That is why I reassert my proposals regarding the supremacy of Parliament over and over again. When our vital national interests are affected, it is and should remain the case that we will legislate on our own terms, unilaterally, in our own national interests, if we have to. We should not be overawed by the fact that some treaties that might have been relevant to past thinking have been drawn up to deal with problems that are not relevant to the present.

Chris Bryant: There seems to be a difference of opinion between the hon. Gentleman and the right hon. Member for Wells (Mr. Heathcoat-Amory). Does the hon. Gentleman really believe that there should be a free-for-all in agricultural subsidies across Europe? That seems to be the end point towards which his logic would lead. He seems to be saying that we in Britain should be able to give out whatever agricultural subsidies we want to. The cost of such activities would go through the roof across Europe, and there would be no benefit whatever to the developing countries.

William Cash: We are engaged in a dynamic process at the moment, and changes are needed. At this juncture, however, the proposed changes to the common agricultural policy are being blocked by France in its own protectionist national interests. I hope that, in the course of these discussions, some common sense will eventually emerge, resulting in our not being completely constrained by the common agricultural policy. The CAP is the elephant sitting in the room. It is unnecessary to have a common agricultural policy in order to have a sensible agricultural policy. There is a difference.
	We must be radical in our approach to all matters affecting the European Union because its structures were constructed in the 1940s and 1950s and, thereafter, were followed by the treaties of Maastricht, Nice and Amsterdam and, ultimately, by the European constitution. None of these was ever pursued, in this Parliament at any rate, with any kind of rational explanation. We were simply told that this was the way forward and that they involved negotiating positions that we had to try to accommodate.
	The problem that we now have in Europe is such that we are at a crossroads. It is therefore essential that everyone, whether in the Government or the Conservative party—or even, to judge by what I have heard from the right hon. and learned Member for North-East Fife, the Liberal Democrat party—takes a realistic view and starts to work out which structures are relevant. We must also recognise that, in order to achieve the necessary changes, there will have to be substantial, radical reforms that other member states in the European Union are not disposed to implement.

Edward Balls: The hon. Gentleman mentioned pro-Euro-realism. I believe that that phrase was first used by the Chancellor of the Exchequer in his Mansion House speech in 2001. The hon. Gentleman talks about withdrawing unilaterally in regard to agriculture and trade, and gives the impression, as members of his Front Bench have done, that we can somehow pull away from qualified majority voting or even leave important groups in the European Parliament, such as the European People's party. Is he not at that point withdrawing from the world of realism? Is not that form of realism really the realism of withdrawal?

William Cash: I think that it was T. S. Eliot who said that humankind could not bear very much reality. The hon. Gentleman may just have demonstrated the importance of that statement. To be realistic in this context includes accepting the fact that the Lisbon agenda, for all its attempts to improve the competitiveness of Europe, has failed. Recently, in the European Reform Forum, we took evidence from Will Hutton, who was the rapporteur on the Kok report. He indicated that, as he said in his report, he was deeply concerned about the failure to make the kind of progress needed. The European Reform Forum has also taken evidence from Lord Owen, Lord Dahrendorf and those on the left and right such as my right hon. Friend the Member for Wokingham (Mr. Redwood), Rodney Leach, Charles Grant and others. We have asked open-ended questions of a cross-section of people, with a view to trying to find out whether there is a rational basis for the status quo of the existing treaties, and whether there is or ought to be a serious examination of those existing treaties to improve the situation in Britain and Europe as a whole.

Christopher Huhne: I fear that the hon. Gentleman is in danger of falling into the same trap as the right hon. Member for Richmond, Yorks (Mr. Hague) in assuming that the failures of the Lisbon process are somehow down to the EU. Let us remember that the competence for the Lisbon process is overwhelmingly with the nation state. I am sure that the hon. Gentleman would be the last person in the House to advocate that competences for labour market reform and other structural matters should be handed to the European Union.

William Cash: I think that the hon. Gentleman is rather perversely misinterpreting the information at his disposal. The fact is that the Lisbon agenda is an EU initiative, and it has failed. The best thing that I can recommend him to do—I am surprised that he obviously has not done it—is to read the excellent, or at least interesting, report by Will Hutton. That will answer his questions.

Christopher Huhne: Will the hon. Gentleman give way?

William Cash: No, I think not. I would like to ask the hon. Gentleman, however, whether he had any discussions with Edward McMillan-Scott before both of them went on to the "Today" programme regarding the European People's party.

Christopher Huhne: I can correct the hon. Gentleman on that matter.

William Cash: The hon. Gentleman comments from a sedentary position, but we would be digressing, and you will rightly intervene shortly, Mr. Deputy Speaker, if we are not careful.
	Problems relating to fraud are endemic in the European Union and have not been solved. There were the incidents involving Martha Andreasen, about which we have heard a lot. Nothing effective has been done to change the system to make it work properly. The Court of Auditors has failed to sign off the accounts for the 11th year. Those things are now common knowledge.
	I remember saying to the Prime Minister, shortly after he took up his post in 1997, that he was walking on water now but he would drown in Europe. At the time, he did not really believe that that was possible, but it really looks as though it might be happening. The cheerleader, Peter Riddell, an eminent columnist whom we all read avidly, said in a recently published book, "The Blair Effect 2001–05":
	"So after eight years Blair had failed in his initial aim of ending the decades of British distance, reservation and hesitation about Europe . . . Europe has been a central failure of his premiership. Moreover, since it was one of his top priorities in 1997, Europe is a failure that will feature heavily in the final assessment of his record in 10 Downing Street."
	If that is the case, and the analysis comes from somebody as respected and distinguished as Peter Riddell on a subject that he knows well, all I can say is that the situation has got completely out of control and must be restored, and the existing treaties must be reformed, which will include some extremely difficult but necessary institutional changes. I put it to my party that that will involve a realistic assessment of the kind of Europe that will be capable of delivering prosperity and democracy in the next century. I fear that it will not be capable of reform in its present shape, and that it will therefore fall to the individual member states—and Britain in particular—to take unilateral action to ensure that those things are done, first through diplomatic negotiation and secondly through assertion of the supremacy of our own Parliament.
	There is a vast amount at stake in terms of stability. That has been demonstrated by what is going on in France and Germany, and the rejection of the constitution. There is a massive democratic deficit. In my opinion and, I believe, the opinion of a growing number of people here and elsewhere in Europe—not among the elite, but among the ordinary people—there will be an increasing need to move to a form, whatever it may be called, of associate status. That will enable us genuinely to co-operate in a democratic environment, while sustaining enterprise and business in the new global economy and also ensuring that we preserve the rights of the people who elected us to make decisions on their behalf.

Wayne David: As we all know, this week's European Council comes at the end of the six-month British presidency. I think it is fair to say that disappointment has been expressed in some quarters about the presidency, but we should bear in mind that just a few months ago there was talk of Europe being in crisis. The constitutional treaty had been rejected by the French electorate and by the electorate of the Netherlands, and in many quarters there was great doom and concern about the future for Europe. Would it implode? Would the crisis lead to an unravelling of the whole nature of the European Union? It is to the credit of the British presidency that the Government have taken the lead in getting to grips with the situation, and in introducing what they have called a period of reflection.
	That period of reflection was required. We have now begun to engage in a sensible, down to earth, pragmatic debate on what the European Union is all about. We have also refocused on the issues that really concern people from day to day throughout the member states. Let me give an example. An issue that has loomed large in the British presidency, which I do not think has been mentioned so far today, is the collective emphasis placed on the fight against terrorism. That is tremendously important, and, although it was not anticipated, the presidency has risen to the task of tackling it effectively. For instance, we have seen agreement on the storage of telephone and internet data for use in terrorism investigations, which is of almost inestimable practical importance in the fight that we all face daily.

Mark Hendrick: My hon. Friend speaks of the progress that has been made on terrorism. One practical example of the way in which European co-operation works in that regard is the use of the European arrest warrant to apprehend an alleged participant in the 21 July bombing attempt. Use of the warrant has often been opposed by many Conservative Members.

Wayne David: That is a very good example. It precedes the British presidency, but it has been put to good effect. As my hon. Friend says, when Europe focuses on issues that are of real concern to people it can be extremely effective, and can command support on that basis.

Angus Robertson: Another issue that is high on the EU agenda is people trafficking. In recent days and weeks, a number of member states have announced that they have launched inquiries into alleged people trafficking by one of our coalition allies in the fight against terrorism. Does the hon. Gentleman believe that the UK Government should work with our EU partners to stamp out all alleged people-trafficking?

Wayne David: Without being drawn into specifics in any oblique way, as a matter of principle, yes, there should be dialogue and discussion, and where practical co-operation is mutually beneficial, it should of course take place.
	The other issue of central importance to the British presidency has been the enlargement of the European Union. According to the treaty that was agreed and ratified by this House, at least, Romania and Bulgaria should join the EU in January 2007. It is true that both countries have a great deal of work to do in the next few months to ensure that the European Commission can propose to the Council next April that they are indeed ready to join, but there is good evidence to show that they are making a big effort and that they will be ready.
	I draw attention in passing to the case of Michael Shields, the football supporter from England who was arrested in Bulgaria, to whom reference was made earlier. The European Scrutiny Committee raised this issue as part of our discussions when we went to Bulgaria the other day; indeed, I raised it with the Bulgarian President. The Bulgarians are acutely aware of that case and I know full well that our Foreign Office has been working hard on it.

Elfyn Llwyd: In that context, is the hon. Gentleman also going to refer to Turkey and the Ocalan case?

Wayne David: If the hon. Gentleman will contain his enthusiasm for a moment, I shall logically work my way toward Turkey.
	It is noteworthy that in the past six months the European Commission has proposed that Macedonia become a candidate country. That is important, given the recent history of warfare in the Balkans. If the EU can be used to bring more stability to, and cohesion in, the western Balkans, that is to be warmly welcomed.
	I turn to Turkey, to which the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) referred. As we know and as Members in all parts of the House will welcome, Turkey—along with Croatia—has begun negotiations on joining the EU. The momentum that has built up in the past few months is likely to continue. Genuine reform has taken place and there is the real prospect of Turkey's future EU membership stimulating further reform. Of course, many things are still wrong in Turkey. When the ESC visited Ankara last week, we discussed with the Turkish authorities some of the current misdemeanours and incidents of human rights abuse in that country. No one would condone such behaviour for one moment, but it is important to recognise that our being able to have that dialogue and to put pressure on the Turkish Government is worth while in itself and is already producing positive results.
	Of course, the issue that will loom large in the next few days is the financial perspective: the EU budget for 2007–13. In that regard there are two closely linked issues of central importance: the common agricultural policy and the British rebate. The case for reform of the CAP has been well made time and again in this House and elsewhere. As we all know, it needs fundamental reform in the interests of the British consumer and taxpayer, and of poorer people throughout the world. Our Government are absolutely right to say firmly—to the French Government in particular—that we want nothing less than full-blooded reform and that we will fight on until it is achieved.

Ian Davidson: Does my hon. Friend therefore agree that there should be no deal on the budget unless all concerned, including France, agree to re-examine the CAP, and that such re-examination and reform should take place before 2013?

Wayne David: It would be wonderful and easy for us to conduct negotiations among ourselves about what the financial perspective should look like, but it is important to emphasise that, however long it takes, we must continue to argue the case for reform. Ultimately, that case is unanswerable: sooner or later, the French Government will have to accept it. More information should be provided better to inform the debate.
	It is important to recognise that the British Government have moved on the rebate to some extent and for justifiable reasons. We do not want to penalise countries that have just joined the EU in respect of their contributions. We do not want them subsidising the British rebate. Furthermore, many of the new countries are making use of and looking forward to future structural funds from the EU.
	One of the biggest problems faced by the east European countries is absorption. Indeed, we had to confront a similar problem in south Wales under the last Conservative Government, when industrial south Wales was classified as an area of support called objective 2. We had real difficulty drawing the money down from Brussels because of the match funding stipulations. There were problems at that time with public expenditure, but the point that I am making is that it is not as easy as simply allocating tranches of money in one direction. The money must be used effectively and the match funding and infrastructure must be in place so that the full amount can be put to the best use.
	Many of the Governments of central and eastern Europe now recognise that, under the Luxembourg presidency's proposal, those large sums of money could not be used effectively. We are seeing a greater realisation among those countries that it is important to have the money quickly and up front and to make the most effective use of the structural funds that are allocated. This is not a theoretical debate about large sums of money, but a practical debate about how to invest specific amounts of money as quickly and effectively as possible.

Angus Robertson: Does the hon. Gentleman agree that structural funds have played a significant role in the economy of Wales and Scotland? Does he share my concern that part of the UK Government's position might result in a step-change reduction in structural support, although the need for such support in Scotland and Wales remains? What would be his advice to Ministers about the stage at which such reductions become unacceptable?

Wayne David: Of course I want to see as much money coming into my constituency and nation as the hon. Gentleman does into his constituency and nation, but it is important to recognise what the Chancellor has said on many occasions: whatever the final agreement reached under the British presidency or later, the regions and nations of the UK that are presently in receipt of structural funds will not lose out. We have a cast-iron commitment, whatever the hypothetical scenarios of the future, that that support will continue.
	If agreement is reached in Brussels over the next few days—I certainly hope that it will be reached—it will not be the end of the story as far as the financial perspective and the budget are concerned. If agreement is reached, negotiations on the fine detail of the budget will continue next year under the Austrian presidency and discussions will carry on under the inter-institutional agreement. The European Parliament will be intimately involved and it would be wrong for us to think that those discussions do not matter. They matter a great deal to the fine detail of the final budget arrangement.
	We must also recognise that the European Parliament has real powers these days. The co-decision procedure gives it real influence on EU legislation, so it is all the more remarkable for the Leader of the Opposition to suggest that his 27 MEPs should neuter themselves, in effect, by leaving the European People's party, and so consign themselves to political oblivion in the European Parliament.
	I am sure that the House is fully aware that the right hon. and learned Member for Rushcliffe (Mr. Clarke) has, in his usual way, made some very trenchant remarks. However, hon. Members may not be so well aware of what some Conservative MEPs have said recently. I refer in particular to an article in this morning's edition of The Times by Caroline Jackson, who has been Conservative MEP for South West England for many years. She is a very distinguished European parliamentarian, and has chaired that Parliament's Environment, Consumer Protection and Public Health Committee with some distinction. In the article, she considers where Conservative MEPs might go on leaving the EPP, and with whom they might associate. She states that
	"so far the only possibilities may be Polish and Czech peasant nationalists, three eccentric Swedes, a French protectionist Eurosceptic and two MEPs from the Netherlands' extreme Christian party which wants to stop Sunday . . . riding."
	That says a great deal about the options facing Conservatives in the European Parliament.
	If I may, I shall give the House one other quote. It is from Mr. Edward MacMillan-Scott, a Conservative MEP who is treasurer of the Conservative group in the European Parliament. At one time, he was its leader, and he was quoted in the Daily Mail as saying:
	"I can't believe that a leader of the Conservative Party would seriously contemplate breaking the last remaining international link that the party enjoys. I negotiated an agreement with William Hague when he was leader in 1999 that we would remain associate members of the EPP. The alternatives are frankly barking."

Jeremy Browne: Does the hon. Gentleman share my concern that the stance taken by the Conservative party in disassociating itself from the EPP will damage the British national interest, at a time when many large Governments in Europe are run by centre-right politicians? That is especially worrying, given that the recently elected Chancellor of the EU's most populous and, in terms of overall GDP, most prosperous country belongs to a centre-right grouping from which our Conservative party is trying to distance itself.

Wayne David: Yes, I am concerned about that. Of course, it gives Labour Members much joy and pleasure to make fun of the ridiculous position that our Conservative opponents' new leader has put them in, but I am very concerned about our national interest.
	The point that I was implying was made explicit by the hon. Member for Taunton (Mr. Browne). It is that the EPP is the largest group in the European Parliament, where negotiations are going on about the EU budget. The EPP is fighting hard for a certain political outcome, and it also contains British MEPs who—I hope—are fighting for the British national interest. Taking those British MEPs out of the EPP and marginalising them is bad for the Conservatives, but it is also bad for our country's national interest.

William Cash: Like me, the hon. Gentleman is a member of the European Scrutiny Committee. Does he accept that Labour MEPs have also disagreed with their Government on occasion? When one cuts to the chase, do not the real questions have to do with the nature of our national interest, and who represents it? I believe that the short answer is that the national interest is represented by our Government, who are elected in the Westminster elections. Final accountability ultimately rests with this Parliament, and the key point is that we are talking about national sovereignty.

Wayne David: With all due respect to the hon. Gentleman, this is not an academic debate; it is a debate about practical politics and practical influence. In the EU as it currently exists, power is divided between the European Commission, the European Parliament and national Governments. If we are to be truly effective in exerting our national influence, as well as changing the face of Europe, we must ensure that we exercise our influence in all those different institutions. That is the important point that we must bear in mind.
	In conclusion, it is very fortunate that we are having this sensible and constructive debate on the eve of such an important summit. I do not think that it will be the end of the world—it certainly will not be the end of the EU—if agreement is not reached on the budget. Discussions will have to continue into the Austrian presidency and, possibly, beyond. However, there is a very good chance of reaching an agreement in the next few days. I am absolutely confident that the British Government have ensured that, at the end of their presidency, Europe is pulling together far more than was the case six months ago. Britain's national interest has been clearly and precisely mapped out, and the British Government have done so in such a way that is not just crudely in Britain's national interest; they have couched their arguments so that they are seen as in the interests not only of Britain but of the whole EU. That is why, on balance, I am optimistic that an agreement will be reached on the new financial perspective that will be good for Britain and good for Europe as well.

Robert Walter: Thank you, Mr. Deputy Speaker, for calling me in what is a most important debate.
	I welcome my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) back to the Front Bench. He brings considerable experience and credibility to debates on foreign affairs and a great deal of knowledge of the subjects that we are discussing. He mentioned in his speech a great deal of disappointment, which is general not only in this country but throughout Europe, at the lack of any real achievement from the UK's presidency of the EU over the past five and a half months, without saying that there would be no achievement at all.
	I congratulate the Foreign Secretary and the Government on their one achievement of the presidency: the opening of negotiations with Turkey. There were times when I thought that they might be knocked off course by a number of European leaders—most notably, the President of France, Mr. Chirac—but the Foreign Secretary certainly saw his way through and negotiations were opened with Turkey. That is the right way to proceed. The Turks accept that that will be a slow process.
	A few months ago, I attended a meeting with the Turkish Finance Minister, who openly said that he was looking at a minimum time scale of 10 years for the negotiation process before Turkey will become a full member of the EU, but it is right that we should be moving in that direction, as we are doing with Romania and Bulgaria. I also welcome the opening of negotiations with Croatia. A number of other states, both in the Balkans and elsewhere, are eyeing EU membership, but I want to talk, Mr. President—[Interruption.] I apologise for that slip, Mr. Deputy Speaker.
	I want to talk about another presidency that runs in parallel with the presidency of the EU, which the UK Government hold at the moment: the presidency of the Western European Union. They are interrelated, because, as I said earlier, the European Commission and the European Parliament have no competence in European security and defence policy, but the WEU, which predates the EU and the European Economic Community, has such competence. The military operations of the WEU are vested in the EU and the two bodies act in parallel—a concept known as double-hatting.
	The WEU Assembly is composed of members from several national Parliaments, including ours; 18 Members of the House and the other place are full members of the Assembly and 18 are alternate members. The Assembly meets twice a year to oversee security and defence policy in the European arena. It is custom and practice that the Government holding the EU presidency come to the Assembly, in the shape of either their Foreign or Defence Minister, to answer questions and make a presentation on the achievements of the presidency in European security and defence policy.
	It was thus with great embarrassment that, at the June session of the Assembly, British members found that although the Foreign Secretary's name appeared on the agenda, he failed to turn up as he had discovered that he had business elsewhere. Not only did he fail to turn up, he failed to send any of his junior Ministers at the Foreign Office or a Minister from the Ministry of Defence. Instead, he sent the British ambassador in Paris to read out his speech and answer questions on it. The ambassador was extremely competent, but he is not a Minister.
	At the Assembly's most recent meeting, which took place last week, we were full of hope that, given the achievements that had been made, the Foreign Secretary would make a speech to the WEU. His name appeared on the agenda for Wednesday, but on Monday morning the agenda was changed to indicate that yet again his speech would be read by the British ambassador, as the Foreign Secretary had urgent business elsewhere. We all understood what that business was: he was trying to negotiate the budget. Again, however, a Foreign Office with six or seven Ministers, and a Ministry of Defence that probably has the same number, failed to send a substitute and the speech was read by the British ambassador.
	That was doubly embarrassing, because Austria, which takes over the EU presidency on 1 January, sent its Defence Minister, who made a speech and answered questions. The Austrians have already agreed to host a series of meetings during their presidency to deal with European security and defence matters. The Finns, who take the presidency for the second half of the year, have agreed to do the same. Austria is not a full member of the WEU because it is not a NATO member, so the British Government have time to make some recompense because they will continue to hold the presidency of the WEU in name for a further six months. I look forward to welcoming the Foreign Secretary to the next Assembly meeting—in Paris, in June—when no doubt he will reply to the questions that he failed to answer.
	Britain is a founder member of the WEU, so it was with some embarrassment that I discovered yesterday—I gave the Foreign Secretary prior notice that I would raise this point—that the UK had failed to pay its budget contribution to the Assembly, to meet the salaries and pensions of its staff. The amount is not enormous: €278,000 or about £190,000. I understand that this is not the first time that it has happened, but on the previous occasion on which the United Kingdom failed to pay, the Assembly secretariat was promised that it would not happen again and told that there had been an oversight. An oversight has happened again, so by the time that the Minister makes his winding-up speech, I hope that someone in the Foreign Office will have found their biro and cheque book and made the payments so that the staff of the body can be paid at the end of the year.
	We can trace back the whole concept of the European security and defence policy in its present guise to the Maastricht treaty, which quite clearly set it up as a second pillar operation, meaning that it was intergovernmental. As it is an intergovernmental arrangement, it does not involve the European Commission or the European Parliament. There might be some hon. Members who welcome the fact that those bodies are not involved, but there is scope for parliamentary scrutiny.
	I am sorry that the Foreign Secretary has left the Chamber again because I going to quote from the speech that was read for him last Wednesday—I hope that he wrote it so that he knows what I am about to cite. It is all about parliamentary scrutiny. As the hon. Member for Ilford, South (Mike Gapes), the Chairman of the Foreign Affairs Committee, said, 14 military operations are taking place under the ESDP, but I am worried about the lack of accountability and scrutiny.
	The Foreign Secretary's speech last week said:
	"Scrutiny of European defence and security issues by national parliaments is essential. The WEU Parliamentary Assembly remains a unique forum to facilitate interparliamentary dialogue and discussion. The Assembly is inclusive and reaches beyond the boundaries of the EU. It continues to offer an important link between EU citizens and governments in security and defence—vital issues our citizens care deeply about".
	If the Assembly is to provide that link between Governments and the people, we must bear it in mind that the Foreign Secretary is presently the representative of those Governments as the holder of the presidency of the WEU.
	The Western European Union—I will not go on about this ad infinitum—dates back to the 1948 Brussels treaty, which was why I said that it predates the European Community and the European Union. The Assembly was established in 1954 under the modified Brussels treaty and it had its first meeting a year later.

Mark Hendrick: The hon. Gentleman may or may not be aware that these debates are normally held before European Councils so that we can reflect on the presidency of whichever country has held it and perhaps offer advice or support for the forthcoming meeting. I understand that the Western European Union is not on the agenda of the forthcoming European Council.

Robert Walter: If the hon. Gentleman does not believe that the matter is on the agenda, he does not believe in democratic accountability for the European security and defence policy. As has already been pointed out, seven more missions under the ESDP have taken place under this presidency. Surely we, as parliamentarians, should exercise democratic scrutiny of what is being done in our name and the names of the peoples of Europe under the policy. If the ESDP is not on the agenda for the European Council, it jolly well should be. I believe that it will be on the agenda because there will have to be stocktaking of what has taken place regarding the missions, especially the new missions that are under way and those that have been agreed to. Only two weeks ago, the EU agreed to a new mission on the border between Moldova and Ukraine.

Mark Hendrick: I would appreciate the hon. Gentleman's remarks more if he would discuss the new institutions and not go back to 1948.

Robert Walter: I was merely trying to give right hon. and hon. Members who may be unaware of their role and powers in this regard an outline of what they are. I will continue briefly to develop that point. It is important that we have scrutiny of European intergovernmental activities because that scrutiny cannot be exercised elsewhere. It must be exercised either through individual national parliaments or through an inter-parliamentary body. That body already exists, and it has existed since 1954. I have made the point about the Foreign Secretary's non-attendance at two important meetings. It is important that Governments take note, and particularly that the presidency takes note, of the fact that parliamentarians deserve to be treated in such a way that they can exercise appropriate scrutiny and achieve democratic accountability.
	The nature of the operations that we have embarked upon—the 14 missions—is that they take place under the Berlin-plus agreements, which means that they take place within NATO. They are EU operations within NATO, using NATO assets. The EU military commander in this regard is the deputy Supreme Allied Commander Europe of NATO.
	There are missions in the Balkans, to which reference has already been made. There are missions in Iraq, Afghanistan and in Palestine, which the hon. Member for Ilford, South mentioned. There are other missions in Africa and also in south-east Asia. I am concerned about the lack of effective scrutiny of these missions. If the European Parliament has no competence, is it realistic to expect 25 individual national parliaments to exercise effective scrutiny of missions that are intergovernmental and international with an international commander? That is why I make the point that under the second pillar of the European Union, this intergovernmental pillar, we should give real weight to the one inter-parliamentary body that exists, which is the Western European Union Assembly. Power is exercised already in terms of the Council of the WEU in the form of its permanent representatives, which is also the Political and Security Committee of the EU. The western European armaments group has become the European Defence Agency and the military staff are now part of the EU. If we are to have effective parliamentary scrutiny, Ministers must attend.
	I will make one other point on scrutiny and I direct it to the Minister, who can relay it to the Foreign Secretary, who holds the presidency of the General Affairs Council. It is that the EU high representative, who is Secretary-General of the European Council, and was also Secretary-General of the Western European Union, Mr. Javier Solana, must also be subject to some form of democratic accountability. His record is worse than that of Ministers. It is four years since he has subjected himself to any form of democratic scrutiny.
	I understand that Mr. Solana never appears before the Political and Security Committee of the EU. He rarely appears before the General Affairs Council because he regards himself as solely responsible to Heads of Government and Heads of state. He appears to go round the world like some proconsul taking responsibility for sorting out all this ESDP on his own shoulders and then presenting the occasional report to Heads of State and Government in the European Council.
	This democratic deficit must be solved. There has to be better scrutiny of all EU affairs in the House and in other national parliaments. We must make sure that accountability and transparency is much greater in Brussels. I was not in favour of the European constitution, but one of its provisions was that the Council should meet in public for its decision-taking processes. That does not require a treaty or a constitution, and the decision could be put before the Council by the incumbent presidency. Given that the constitution is no longer on the radar screen, I am disappointed that the UK presidency has not put before the European Council the proposal that the Council of Ministers should meet in public so that we can see what decisions are made.
	The hon. Member for Leicester, East (Keith Vaz), a former Minister for Europe, said that he always argued Britain's case in the council. It would be nice to see our Ministers doing so, so that we can be sure that a British Minister has argued our case. If they lose, we can see them doing so. At the moment, when Ministers find a decision from Brussels embarrassing they use the cover of blaming Brussels, even though they were at the Council meeting that agreed those provisions. We therefore need transparency in that decision making. Finally, we need much better and much more effective democratic scrutiny of the ESDP, which is a second-pillar measure.

DEFERRED DIVISION

Mr. Deputy Speaker: I must announce the result of a deferred Division.
	On the motion on the national health service, the Ayes were 243, the Noes were 211, so the motion was agreed to.
	[The Division List is published at the end of today's debate.]

European Affairs

Question again proposed.

Mark Hendrick: May I congratulate my right hon. Friend the Foreign Secretary on the UK presidency, and wish him, the Prime Minister and other Ministers all the best for the forthcoming European Council? As a former Member of the European Parliament, I recall that we held the presidency in 1997, not long after our election victory in the UK, when the introduction of the single currency was under way. I was interested to hear my right hon. Friend the Foreign Secretary say that he had saved the pound, only to qualify that achievement with reference to the five economic tests, because I believe that, one day, the UK will join the eurozone, from which it will benefit greatly.
	Since then, there has been a great deal of change in Europe. When I became a Member of the European Parliament in 1994, just 12 member states were represented. Three more countries joined the European Union, and last year, another 10 states joined. The progress of those countries and the way in which they have developed since the fall of the Berlin wall in 1989 and the fall of communism are a tremendous achievement and testament to the popularity and success of the EU in recent years. I am therefore dismayed that many hon. Members should take a negative view of the EU. We need only look at recent history to see the role that it has played in maintaining peace, prosperity and democracy and understand why countries are clamouring to join. The EU is the key to peace, prosperity and political stability, as is NATO, which many of those countries have also joined.

Kelvin Hopkins: My hon. Friend talked about prosperity, but is it not the case that the eurozone has grown more slowly than the Organisation for Economic Co-operation and Development area in general and, in recent years, more slowly than Britain? Economically, it has not been very successful.

Mark Hendrick: The failure of certain countries in the eurozone to grow at a good rate compared with the UK has much to do with structural economic reforms that need to take place, many of which have been discussed by hon. Members on both sides of the House and which include the labour market and competition policy. The competition authorities in Brussels would have liked to improve many aspects but member states have dragged their feet. It is a matter not just of monetary policy, but of the labour market and economic policy adopted by those countries.

David Gauke: The hon. Gentleman says that the EU has been heavily involved in bringing prosperity to Europe. Is it not the case that the four countries with the highest average incomes in Europe are Liechtenstein, Iceland, Switzerland and Norway, none of which is in the EU?

Mark Hendrick: That is the case, but the hon. Gentleman is not comparing like with like when he compares countries such as Liechtenstein and Norway with countries such as Italy, France, Germany and the UK. Even though they are not members of the EU, the countries that he mentions benefit from the European free trade zone, which operates alongside the EU. However, they have none of the advantages of being able to influence the rules of the single market, which we operate as members.
	I look forward to welcoming Bulgaria and Romania into the EU in 2007 and, further down the track, Croatia and Turkey. Previous speakers have mentioned the importance of Turkey. Like other parts of central and eastern Europe, it will benefit from economic and political security through membership of the EU. Also, as has been mentioned, it is a Muslim country and its accession will get rid of the myth that the EU is some kind of Christian club. That in itself will be a huge achievement and send a signal to the rest of the Islamic world that the west is not anti-Islamic and that it is pro-people, irrespective of their religious backgrounds. I congratulate my right hon. Friend the Foreign Secretary on brokering the historic deal on 3 October.
	On the budget and EU perspectives for the period 2007 to 2013, it is important that some agreement is achieved, even if it is less ambitious than our original aims. Hon. Members have mentioned the possibility that France may scupper an agreement because of disagreements over the common agricultural policy. Having witnessed the Make Poverty History campaign over the past 12 months, none of us in our own minds can justify the $2 a day spent on European agriculture, as against the $1 a day spent on people in the poorest countries of the world.
	Whatever agreed position is adopted at the Council—I assume there will be agreement—I hope that at the trade summit and the Doha round in Hong Kong, any agreement reached on agricultural subsidies is brought back to the EU, and the EU perspectives in the budget for 2007 onwards adjusted accordingly. Although this week is important for determining a budget for 2007 onwards, it is not the end of the story. We will then be involved in multilateral trade talks in Hong Kong and their implications.
	It is not right, as hon. Members have said, that 40 per cent. of our budget is spent on farm subsidies. There is €8 billion on offer for enlargement, for expenditure such as structural fund payments. Let us be honest—those countries must restructure their economies if they are to become valuable trading partners in the European single market, which will benefit them and us. As the European Union becomes bigger, more trade will take place, which will make the EU more prosperous. The €8 billion is not wasted money, because it helps those countries to develop, which, as I have said, benefits them and us.
	Despite remarks by Conservative Members, the rebate remains intact. The rebate was negotiated before enlargement, and none of the money that relates to the EU 15 is being given up. The money that is being given up is to help the enlargement countries and, as someone who still describes himself as a socialist, I have no problem with that. The UK will still receive more money that it has in the past through the rebate, and that money will be spent on development in different parts of the UK, so I think it a win-win situation, providing that agreement is obtained on the budget in the European Council.
	It would be ludicrous if did not make some movement on the rebate. As has been said, when it was agreed in 1984 France and Germany were far more prosperous than the UK. If things were left as they are, the UK would be the second lowest contributor as a proportion of national income, which cannot be right when so many poor countries have joined the EU.
	The failure of the referendums in Holland and France has cast doubt on the future of Europe, and it has perhaps led to a more cautious approach on what Europe is and what it is about. There is nothing wrong with change in itself, and hon. Members have discussed a period of reflection. The Hampton Court summit, which the Prime Minister organised, concerned such reflection, and I shall discuss that matter in greater detail.
	This afternoon, Conservative Members have discussed the constitution for a long time. Some of them are not satisfied with dancing on its grave and want to dig up the body and swing it around, which is ridiculous. Given the failure of those referendums, we must ask ourselves what Europe is about in the 21st century. What are the relevant structures for Europe and what are the imperatives for financing Europe in the 21st century? The CAP and the structural funds must play a huge role in the answers to those questions.
	As other Labour Members have said, the rebate will not disappear as a whole, and it will not be on the table as a whole until we achieve significant CAP reform. We have already seen some progress, which is why I am unhappy about the degree of negativity in the House. Tremendous progress has been made on sugar reforms, which will save €3.5 billion to €4 billion and which were secured by my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs.
	On the Lisbon agenda, the shadow Foreign Secretary said that there had been little progress in this Parliament. As hon. Members will know, the Lisbon agenda goes back to the Portuguese presidency of six or seven years ago. It is down to national member states to implement it. The European Union can make decisions but it cannot implement them without the co-operation of individual national Governments. It is disingenuous to pretend that the issue is just for the EU institutions, and it presents it in an unrealistic and a bad light.
	Everybody wants a more dynamic and competitive knowledge-based economy in Europe, but it will take time. The six months of a British presidency is not sufficient, nor was the six years since the Portuguese presidency. Changes in culture will be required. We cannot restructure other countries' economies—that must be done by their national Governments. The CAP is important in relation to budget reform. However, if we could spend money on research and development to develop knowledge-based technologies and economies instead of spending it on agriculture, we would get more bang for our euro in terms of expenditure from the central pot of the European Union. We need value for money.
	I was a little dismayed to hear the shadow Foreign Secretary speak in the same way that he did when he was Leader of Her Majesty's Opposition, with continual doom and gloom and negativity about Europe. Many Conservative Members shed crocodile tears over money spent on the CAP, but when they were in government they were happy to give those heavy subsidies to farmers in their own constituencies. The double standards of the Conservatives' attitude towards Europe will lead to their losing considerable credibility. Withdrawal from the European People's Party would be a huge mistake that the new Leader of the Opposition will come to regret. When I served in the European Parliament, I met the headbangers to whom the right hon. and learned Member for Rushcliffe (Mr. Clarke) has alluded. In my experience, what the right hon. and learned Member for North-East Fife (Sir Menzies Campbell) said about certain Members of the European Parliament is completely accurate. It is ironic that he should mention Sir Robert Atkins, who replaced me as a Lancashire MEP in 1999. That is why I am speaking in this House today.
	We are seeing more of the same old Europhobia—in favour of enlargement but asking for a referendum on Nice so that people could say no, and in favour of a referendum on the constitution, again so that people could say no. The constitution would have given new powers to national Parliaments, which would have made enlargement work better and allowed for a repatriation of powers that is now not possible given the existing treaties. What we have seen today is vintage Conservative Euroscepticism. Europe-bashing will not substitute for responsible foreign policy.
	The British presidency has been successful because it has been positive. I mentioned the sugar reform, which has improved the quantity and quality of development aid. Sixty per cent. of the €4 billion has gone into the global fund to tackle AIDS, TB and malaria. The EU has been able to move mountains in terms of tackling climate change, as we saw from the historic deal in Montreal.
	The successful European security and defence policy was mentioned. Work on the Rafah border between Gaza and Egypt has enabled the peace process to go forward. We expect progress in Hong Kong in the EU and World Trade Organisation negotiations. There has been progress on financial services action plans and directives on services, which account for approximately two thirds of Europe's GDP. Progress has been made on chemicals, for example, through the Registration, Evaluation and Authorisation of Chemicals—REACH—programme, which balances health and environmental concerns with industrial competitiveness.
	The work on counter-terrorism measures has been mentioned. The EU has been in action in Bosnia to promote peace and stability. The meeting at Hampton Court was an initiative of the Prime Minister's, which led to debate on the future of Europe and the changes that are needed to meet the challenges of globalisation. There were new initiatives for research and development and universities. Demographic changes in Europe, energy supply security and immigration were also discussed.
	It has been a good presidency and I congratulate the Prime Minister, the Foreign Secretary and other Ministers on their success, for which they deserve credit. Europe in the 21st century is a new Europe. It has 25 members and will possibly soon have 27 and then 30 members. Peace, prosperity and political stability have been the key to Europe and we still need the original ingredients that were used to achieve those aims. However, the threats that the new Europe faces are different from those that confronted the old Europe.
	The two big issues for the new Europe are not communism and fascism but globalisation and terrorism. The changes that we want and have tried to promote through our presidency are part and parcel of dealing with globalisation. The recent arrest with regard to the 21 July attempted bombings has shown the value of European co-operation, with the introduction of the European arrest warrant before our presidency.
	The constitutional referendums in France and Holland were a setback, as is slow progress on the Lisbon agenda. However, the history of Europe shows that it must go forward, even if that means two steps forward and one step back. That approach will take Europe into the 21st century and make for a prosperous and harmonious Union in the future. The Hampton Court meeting was about that. We need more Hampton Courts. The European institutions need to adapt to the blue-skies thinking that happened there.
	Our future and destiny continue to lie with the European Union. I believe that the constitution contains much good for the betterment of Europe. I believe that, one day, this country will join the European currency. Perhaps that will not happen this decade, but it makes sense for the future and for a Europe that works in the 21st century.

Elfyn Llwyd: I join in the welcome to the right hon. Member for Richmond, Yorks (Mr. Hague) on his return to the Front Bench. He made a good speech and although I did not agree with parts of it, the House will benefit from his presence on the Front Bench.
	The Commission proposes to modify objective 1 and I shall speak briefly about structural funds as they affect Wales today. Hitherto, no one has mentioned objective 1, which is vital to Wales. Before I deal with the subject, I simply want to say that I accept that reform of the CAP is a given and that we should be prepared to consider an aspect of the Fontainebleau repayment. I also agree with the Foreign Secretary's opening remarks that the more prosperous countries in the European Union should be prepared to assist the incomers who are in need.
	I want to confine my main comments to objective 1, which the Commission proposes to modify to highlight the economic convergence aspect. It may become known as the convergence objective. Regions will be eligible if the GDP per head is less than 75 per cent. of the average for the enlarged EU. That is not a fanciful figure. There are already three such areas in the UK, of which west Wales and the valleys is one. Unfortunately, at present anyway, that area is still hovering around the 75 per cent. mark. So it is not fanciful to talk about this; it is the reality. I live in the middle of that area. There will be transitional funding for regions that currently qualify but which will cease to do so as a result of enlargement, and there will be money for whole member states whose GDP is below 90 per cent. of the European average.
	In January this year, the Commission published new statistics on GDP per head. These included figures for the average for 2001–02, which will determine the eligibility for the structural funds. Under the heading "Revised eligibility statistics", west Wales and the valleys is among those areas listed as being below the 75 per cent. threshold, with a GDP at that time of 73.8 per cent. of the EU average, and only 67.35 per cent. of the average for the pre-enlargement 15 EU member states, compared with 73.8 per cent. of the average for the EU 15 in 1999.
	Obviously, Wales has benefited to a certain extent from objective 1 funding, and we are as desperate as anyone else to ensure that we continue to do so. However, it appears from recent press releases and from statements by Ministers that the UK Government seem almost to have planned for 2007 on the assumption that only one objective 1 funding area will remain in the UK—perhaps Cornwall. Speaking in Newcastle in June 2004, the then Secretary of State for Trade and Industry said:
	"We know that there are challenges in terms of the future of EU funding. The EU has expanded, and most of the new member states are poorer than average. Our ability to provide regional selective assistance will be severely limited . . . But reform of the EU Structural and Cohesion Funds must focus on provision for the poorest member states".
	I have already prefaced my remarks by saying that I agree with that in principle. Unfortunately, however, there are still parts of Wales, Cornwall and Scotland that qualify as being poor.
	In a letter dated 17 January 2005 to the Chair of the House of Commons European Scrutiny Committee, the then Financial Secretary to the Treasury listed six objectives of UK Government policy in the present EU budget discussions. They included
	"for the Structural Funds, to refocus support on the poorest Member states, within an EU framework".
	That appears almost to rule out any further European structural objective 1 funding for parts of the UK.
	The Competition Commissioner, interviewed in the Financial Times on 26 January, argued that even regions falling below the 75 per cent. figure should not be eligible for UK Government state aid, as distinct from EU aid, if they were within member states that were not relatively poor. That would rule out west Wales and the valleys, as well as some regions in eastern Germany. The Governments of the United Kingdom, France and Germany have all objected to this, even though it appears to be UK policy.
	So the level of funding for the new convergence objective depends on an unresolved argument about the EU budget as a whole, including the total size of the budget and the proportions allocated to agriculture and other budget headings.

Robert Walter: The hon. Gentleman and I were involved some years ago in discussions about bringing on objective 1 funding for Wales. I am sure that he will remember that part of the Treasury's problem—this may or may not be helpful to him—is that the combination of the match-funding and the abatement of the rebate means that the Treasury actually meets 70 per cent. of all the EU regional aid that is provided.

Elfyn Llwyd: The hon. Gentleman is right, and that has always been a problem, although it is rarely spoken about as factually correct. In a strange sort of way, if the rebate goes, we might be in a better position if we retain objective 1. [Interruption.] That is not a perverse argument, but a perfectly logical one, as it happens.

Chris Bryant: A perverse system.

Elfyn Llwyd: Perhaps it is a perverse system, as the hon. Member for Rhondda (Chris Bryant) comments from a sedentary position, but there we go.
	As I have said, the Government have stated six objectives, and I have referred to what the Financial Secretary said. We really must impress on the Government the need to ensure that objective 1 funding remains available for west Wales and the valleys—I am trying not to be parochial, but the fact is that the area qualifies in any event.
	The 1 per cent. ceiling, which was put forward in a joint letter on behalf of the Governments of the UK, France, Germany, Sweden, Netherlands and Austria in December 2003, is important, but the recent EU enlargement, as we know, has increased the EU population by about 30 per cent. but its total GDP by only 5 per cent. That is the pressure with regard to assisting those who are most in need. That implies further pressure to raise EU expenditure as a percentage of EU GDP. The number of farmers, as we know, has increased by 50 per cent.
	There are problems in the European Union—I am not saying that everything is hunky-dory—such as not signing off the accounts. I accept that. There are also problems from the UK Government perspective. The Court of Auditors has referred to the UK's persistent errors in transactions, failure to comply with regulatory requirements, delay in closing the 1994–99 structural programmes and poor forecasting of expenditure. Those are genuine problems that need to be sorted out.
	All of a sudden, we have arrived at the 11th hour of the UK presidency. It is as if Christmas has leapt up on us, but we knew Christmas was coming six months ago. The Prime Minister is having great difficulty in settling the budget, and I am not altogether surprised. There has been some handbagging and some megaphone diplomacy. It seems to me that the last thing that one would do to the French and Germans is to say that one is going to do away with the CAP—any fool can see that that will not engender any assistance from them. Equally, grandstanding on the Fontainebleau rebate, which has been a thorn in our partners' sides for some time, will not engender any co-operation either. We are now at the last hour, however, and we must find some way forward. If we do not do so, the structural funds to which I refer seemingly disappear. Among other areas of the UK, west Wales and the valleys will certainly suffer.
	The Government have been a little lax. It appears that four months of inaction have led to some bad drafting that has been rejected by all but Malta. They are only a few days away from the discussions and apparently nowhere near a deal.
	I am also concerned about the low level of the budget and funding for structural funds. The Commission's proposal is €336 billion, Luxembourg's is €306 billion, while the UK's proposal is €296 billion. That means that, whatever happens, there will be less money available for structural funds within the UK. Added to that is the problem of a funding gap because of a late decision. Many projects in the west Wales and valleys region are dependent on European funding, and those involved do not know at this stage what will happen. If there is no decision, some form of alternative money will have to be found, or the schemes will have to be wound up. If there is no decision this week, and we lose out on convergence, will the Government support statistical effect status, and will they guarantee to make up the shortfall in funding caused by the delay and their late and possibly bad negotiating? Will they guarantee that match funding will be provided?
	New GDP figures are due from Eurostat in January. That means that if the budget is not agreed at this week's summit, some areas may not qualify. The new figures may show that the GDP of west Wales and the valleys is marginally above the EU per capita average of 75 per cent. I understand that the Minister for Industry and the Regions has said that if west Wales and the valleys qualifies, Wales as a whole will receive roughly what it receives now from the EU, but if it fails to qualify Wales will receive only about two thirds of what it receives now.
	I should like the Minister to consider whether objective 1 money could be spent on housing. The UK presidency apparently proposes such spending for the 10 new EU states, but rules it out for us. Will the Minister tell us where is the logic in that?
	West Wales and the valleys is a large and vital part of Wales. The position has improved—it would be wrong of me to say otherwise—but there is still much work to be done. Concern about the loss of structural funds is widespread, as has been made clear in yesterday's and today's press in Wales. We are told, for instance, that
	"Welsh MEP Eluned Morgan, on a whirlwind tour of north west Wales"
	—presumably she flew over it—said
	"This December meeting is critical because it stands the best chance of getting the best deal for Wales."
	In fact, it is the last chance. It would be a disaster if we failed to hang on to the money.
	I will not labour the point, but I felt that it was important to make it as strongly as I could. Others—in local government, for example—have expressed concern. Denbighshire county council's European officer has said that up to 250 council jobs could be lost if the budget talks fail. There is a similar story from Ynys Môn county council and from Sheila Potter, Conwy county council's head of regeneration. If we do not retain our designation, Wales is in danger of losing about £1bn over the next seven years. More important, there is a distinct possibility of our losing convergence status over the following seven years, which would have even more dire consequences for us.
	The Foreign Secretary said that my point about objective 1 would be responded to by the Minister for the Middle East. Will the Minister answer this question as well? Some 10 years ago, my party and I referred to all the jollity surrounding where the Conservatives might or might not be sitting in the European Parliament. At the time, my party sat with the European Free Alliance. We discovered a rather unsavoury character there—indeed, a bunch of them—and left the group within a week or so. The Minister discovered that, and sent out a very nasty press release calling Plaid Cymru all kinds of things for having sat with the "nasties", albeit for only a few days. The "nasty" concerned was Silvio Berlusconi. May I ask the Minister what advice he gives the Prime Minister when the Prime Minister holidays in the home of Silvio Berlusconi?

Chris Bryant: I think that the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) must be mistaken. As a neighbour of the Minister, I am certain that he has never issued a press release in his life—unless we include his putting a post-it note on an exhibit in the Turner exhibition describing it as conceptually difficult to understand. If we are going to talk about press releases condemning people, I should point out that the hon. Member for Meirionnydd Nant Conwy frequently issues press releases about me that call me all sorts of things that I would not want to bring up in the House.
	It is very good to come to the regular gathering of the anoraks—

Elfyn Llwyd: I really do resent that remark. I have been a Member for nearly 15 years and in that time not one Member in any part of the House has had occasion to say what the hon. Gentleman just said.

Mr. Deputy Speaker: Order. It would probably be generally beneficial if we got back into a moderate tone and to the substance of the debate.

Chris Bryant: I am very grateful for your guidance, Mr. Deputy Speaker.
	It is nice to welcome everybody this afternoon to our regular meeting of anoraks who express an interest in the European Union. We seem every time to be pretty much an identical set of people, but it was good to welcome the right hon. Member for Richmond, Yorks (Mr. Hague) among us today. It is also good to have my neighbour, my hon. Friend the Member for Pontypridd (Dr. Howells), the Minister for the Middle East, to wind up for us. He is not normally an aficionado of such debates, so I hope that this one has proved enlightening.
	I particularly want to congratulate the hon. Member for North Dorset (Mr. Walter) on his speech. He gave the best articulation I have yet heard of why the European Parliament and the EU itself should have an explicit responsibility for European security and defence policy. All his argument led toward that, although I doubt whether that is quite where he intended to take it.
	The most important issue that we have to debate as we move toward this weekend of negotiations, which the Government will chair, is the budget. Few Members of the House would want us to start from our current position or, for that matter, from the position of five or 10 years ago. The honest truth is that the EU budget is one of the most complicated and recondite pieces of administration in the world. There are remarkably few people, even in the body politic or, I suspect, even among us here today, who fully understand precisely how either side of the budget—the expenditure and the process of contribution by member states—is arrived at. The ordinary member of the public stands not the barest chance of understanding the complex arrangement of customs duties, sugar levies, VAT-based contributions and gross national income-based contributions.
	The ordinary member of the public does not stand a chance of understanding the way in which the system of contributions has changed, either. The tectonic plates of the way that the EU is financed constantly shift. For example, the element of the entire EU budget that came from VAT-based contributions was 40 per cent. in 2000 and 37 per cent. in 2001, yet this year it will account for only 15 per cent. The whole premise on which the budget is put together is constantly changing and difficult to understand.
	Furthermore, as many Members have said today, EU expenditure is not geared toward proper priorities for a 21st century European Union. We have referred many times this afternoon to the €46.5 billion spent in 2004 on the common agricultural policy, and many Members have also referred to the fall in the percentage of the EU's total budget that that represents—from 70 per cent. in the 1970s to a mere 45 per cent. today. Very few would accept, however, that that is enough of a change.
	The complexity of the way in which the budget is put together is best explained simply by looking at the Luxembourg proposals that the then presidency put forward earlier this year, and which were of course rejected by the UK and four other member states. The proposals state that
	"the rate of call of the VAT resource shall be frozen at 0.30 per cent."
	I do not suppose that many in this Chamber, let alone in the wider population, could tell us precisely what that means. The proposals continue:
	"for the period 2007–2013 the rate of call of the VAT resource for Germany, the Netherlands and Sweden shall be fixed at 0.15 per cent . . . on top of the collection costs foreseen in Article 2(3) of the own resource decision, for the period 2007–2013 the Netherlands and Sweden shall be allowed to retain an additional benefit equivalent to 10 per cent. of the amounts referred to in Article 2(1.a) and 2(1.b) of the same decision."
	It is difficult to see how anyone could think that an open, transparent and sensible way of putting together a budget.

Kelvin Hopkins: I must say that, for once, I agree entirely with what my hon. Friend says about the complexity of the budget, but I have suggested many times that if the net contributions to the European budget and the net receipts were in proportion to the level of prosperity in each member state—measured by GDP per head or some other measure—everyone would be happy and we would all understand it.

Chris Bryant: My hon. Friend is an eternal optimist, but arriving at universal happiness around the EU about the budget is going to be slightly more difficult than that. I believe that we should try—certainly by the time we reach the next round of budget talks in 2013—to provide a much more principled budget, based on
	"from each according to his ability, to each according to his need",
	which is similar to what my hon. Friend has just said. Such a principle is, however, difficult to apply.

Robert Walter: I am interested in how the hon. Gentleman is developing his argument, as I believe that the same approach was developed by Baroness Thatcher when she was Prime Minister and was negotiating the Fontainebleau rebate. She argued that, on the basis of our gross domestic product, we were contributing too much to the European Union.

Chris Bryant: The question of how to decide whether a country is or is not a wealthy nation should be fully taken into account. I was about to say that although one might want to assert a simple principle—that the wealthiest contribute the most and the poorest receive the most—it remains complex and difficult to achieve because, as we heard from the hon. Member for Meirionnydd Nant Conwy, countries have both wealth and poverty. One of the oddities of the present structure of the financing system is that it is in the member state's interest to be rich but to have areas of poverty that attract moneys from the EU. That is the best way of ensuring that the net contributions are as low as possible. As I say, that is one of the genuine complexities of the position.
	I suspect that we would all accept that member states as presently constituted are, in many regards, a mere quirk of the history of the past five centuries. That explains, for example, why Austria and Hungary are separate and why the Czech Republic is separate from Slovakia and so forth. Aspects of history have, in a sense, produced the member states of Europe today. Within those member states, there may well be significant regions and areas of wealth and of extreme poverty. As the hon. Member for Meirionnydd Nant Conwy would agree, it took a considerable degree of effort to draw up a map that included all the poorer areas of Wales, which is precisely the problem that we constantly face in attempting to build a budget for the EU that is based simply on principle.
	The second difficulty is that the relative wealth of member states may change quite dramatically over a period of five to 10 years. The economic success of the UK, Spain and Ireland has meant that the relative contributions and receipts of those three countries have changed quite dramatically. The ability of the UK agricultural industry to reform itself has laid it open to receiving fewer subsidies than other countries.

Peter Bone: The hon. Gentleman is making a powerful argument and I think that I agree with him, but is it not just plain daft that the net contribution of the UK, per head of population, is more than 50 per cent. higher than that of France? Surely that cannot be right.

Chris Bryant: I agree. Another principle that we should strive towards as far as humanly possible is that the big, prosperous countries, which are in many ways remarkably similar in their financial structure, should contribute broadly the same. It depends on how we choose to cut the cake of wealth. Whether we analyse it in terms of gross domestic product, gross national income per head or ability to buy will affect the conclusions that we reach about which country is the richest. Consequently, we end up with a lengthy debate between the Netherlands and Spain about how to assess each country's wealth precisely. That is one of the complexities.
	I am constantly surprised at how discussions between colleagues from France, Spain and Greece feature arguments in favour of the CAP that, translated into English, would be almost the same, word for word, as those put forward by the Countryside Alliance. Moreover, I have always been perplexed to hear Conservative Members argue forcefully in this Chamber on a vast range of topics in a vein similar to that adopted by the Countryside Alliance, and then be the most aggressive opponents of the CAP.
	However, the hon. Member for Stone (Mr. Cash) gave the game away this afternoon. What he is really interested in is repatriating agricultural subsidy to member states, because that would mean that each country could go on giving as much money as it wanted to its own farming and agriculture. I am less interested in reforming the CAP than in ensuring that agricultural subsidies across Europe fall substantially. Such a fall would mean that this country was not competing in the agriculture sector on an unfair basis with the poorest countries in the world, and that we did not prevent those countries from earning a decent living.
	I believe that those Conservatives who argue most ferociously against the CAP are not really interested in doing away with agricultural subsidy, but that they are interested only in doing away with elements of the EU.

Kelvin Hopkins: I agree with much of what my hon. Friend has said, but would not giving back agricultural policy to member states mean that we could choose to have lower prices and subsidies? That cannot happen under the CAP.

Chris Bryant: I am delighted that my hon. Friend agrees with nearly everything that I have said. He has said that twice in one afternoon, which must be something of a record, although it does worry me slightly. However, what he does not recognise is that an agricultural subsidy free-for-all in Europe would lead to dramatically increased subsidies in Spain, Greece, France, Germany and Italy. That would give us a far greater problem with the WTO, and mean that we would stand not an earthly chance of delivering anything for countries in Africa, Latin America and south-east Asia. There is therefore a strong moral obligation on us to argue for reduced subsidies. In the interests of internationalism—and of socialism, for that matter—we must try to do our best by the poorest countries in the world. I therefore think that it is vital that we retain a version of the CAP, but we must make sure that it is a restrained version.
	The question of structural funds is slightly different. I agree with the hon. Member for Meirionnydd Nant Conwy that we need a process to make sure that economies that are peripheral—in the geographical rather than the political sense—have a chance to prosper. It is important that the Rhondda in Wales, or Ronda in Spain, or places in eastern Europe, have equal opportunities to prosper—

Colin Breed: What about Cornwall?

Chris Bryant: As the hon. Gentleman suggests, Cornwall is another example. Only by sharing prosperity around Europe will we stand a chance of creating a just and fair EU.
	The question is whether repatriating large amounts of structural funds would open the door to a vast expansion of inappropriate state aid in the eastern bloc, in those countries that have joined the EU most recently, and in those that intend to do so in the future. My worry is that any extension of state aid in Poland and Hungary would not be in the interest of the south Wales valleys, as the competition would be entirely unfair and unsustainable. Again, we want to maintain a structural funds system that brings money not only to the poorest countries but to some of the richest countries.
	That takes me to the UK abatement, which, of course, like many aspects of the budget, is not as simple as it sounds. I would guess that most of my constituents, in so far as they know about the abatement at all, would presume that it is a fixed amount of money that we get back every year—that we get a cheque for £2 billion or £3 billion, or whatever, every year. Of course, the abatement is far more complicated than that, because of several determining factors. It is proportional to 66 per cent. of the net contributions in the previous year. Of course, net contributions cannot be finally adducted until four years after the year in question, because we do not know precisely what the expenditure will have been in each member state and, consequently, we cannot know what each member state's net contribution will have been. Also, most people will not realise that, by definition, our abatement will therefore rise and may frequently fluctuate. Over the past few years, it has fluctuated between €5.2 billion and €5.7 billion a year.
	People might also think that the system is straightforward in that we get some money back and everyone else pays a little bit extra. Broadly speaking, that is true, except that it is not entirely true, because Germany, the Netherlands, Sweden and Austria pay only a quarter of the extra share of our abatement. France and Italy pay nearly half of our abatement. Of course, that might explain the major problem that we have in negotiations with France. There is a row not just about the CAP and the UK abatement, but about the fact that France and Italy between them effectively pay half our abatement—notwithstanding the fact that, as the hon. Member for Wellingborough (Mr. Bone) mentioned earlier, France is not one of the larger contributors to the EU, because of its receipts under the CAP and structural funds. Nevertheless, politicians—especially President Chirac, who is wanted for a third term by a mere 1 per cent. of his country's population and is not particularly popular—obviously have an opportunity to play to their home market and perhaps to fight unfairly.
	Given the way that the abatement is structured, the new 10 countries will pay €290 million of our abatement this year. If there were no UK abatement, France's net contribution would therefore be a mere €1.6 billion and ours would be €9.9 billion. So it is right—indeed, it is entirely ethically and morally justifiable—that the Government should hold to the idea that the UK abatement must continue, but I disagree with some people because I do not believe that the structure of the abatement can remain exactly as it is today. First, it places a particular emphasis on some nations, not on others. Secondly, it places a requirement on new member states—some of the poorest in the EU—to contribute towards our UK abatement, which can only lead to resentment against the UK among those members states' populations. That cannot be in our long-term political interests.
	We were the country—I include hon. Members on both sides of the House—that argued most forcefully for the enlargement of the EU. The right hon. Member for Richmond, Yorks said that we should provide a hearty welcome for the new members of the EU. I do not think that that means that we can invite them to dinner, sit them down at the table and say, "Sorry, we all just had Christmas dinner, but you're now going to have mulligatawny soup." We must be able to provide a clear sense that the welcome is met by the financial requirements that must surely fall on us.
	I believe that there should be a principled rebate. We should welcome the new members and pay our fair share. As I told the hon. Member for Wellingborough, the major, prosperous nations should pay in proportion to one another. That is what we should strive to achieve, because the biggest irony of our situation is that, as I said earlier, given the present structure of finance, rich countries with poor areas do best. Repatriation of agricultural and structural funds might be possible under some form of co-financing, but the last thing we want is a free-for-all.
	I want to stray slightly into the area of how the House carries out European business. We hold debates such as this regularly and the speeches are more or less interesting, but we are poor at scrutinising the process of European legislation coming into UK law. For the most part, we undertake it through statutory instrument, or secondary legislation, which is debated—I use the word generously—for an hour and a half at most in Committee, with no opportunity to amend. That provides us with only scant understanding of how the EU genuinely affects us.
	We tend to consider that European policy is always part of foreign policy, whereas in fact it is largely part of domestic policy. Sometime today, the Government will probably finally agree an artists resale right for the UK, to meet our obligations under the directive passed last year, which we have to put in place by 1 January 2006—we shall have to proceed at quite a pace to do that. When the matter is eventually debated, it will be for only an hour and a half upstairs, even though it is remarkably controversial for some people. To my mind, it is a great progressive measure that will enable many UK artists who struggle on a remarkably small amount of money to retain some of the value of their reward.

Philip Davies: Does the hon. Gentleman agree that one of the problems is that there is so much European legislation? Will he acknowledge that about two thirds of all the laws applied in this country each year come from the EU rather than from Westminster? That is probably why there is not enough time to scrutinise all that stuff. We are overloaded.

Colin Breed: Absolute rubbish.

Chris Bryant: Indeed. There is certainly a lot of legislation, but there is plenty of opportunity to debate it. Unfortunately, remarkably few of us attend the debates. We need a halfway house between the full legislative process that we undertake for UK-originated Bills and the one and a half hour statutory instrument procedure that allows no amendment and no great degree of debate.
	We need an opportunity for Ministers who attend Council meetings to report back. While I worked in Brussels for the BBC, the number of times that Ministers agreed something that was never reported in their country was extraordinary. We do not need an oral statement every time a Minister has attended a Council, but a written statement should be made to the relevant Committee after each Council meeting.
	Furthermore, there should be a specified period for Europe questions—

Graham Brady: indicated assent.

Chris Bryant: The hon. Gentleman agrees; he wants his hour in the sun, and I am sure he would be well tanned by the end of it.
	A Europe Question Time would be an important part of the accountability process for our membership of the EU. One of the difficulties is that, due to the ballot, there is all too often no question on the EU from month to month in Foreign and Commonwealth questions.
	I do not want to intrude too much on private grief in the Conservative party, but I am perplexed that a party with a certain degree of respect in the European Parliament and certain positions of responsibility, including a vice-presidency, a quaestorship and various committee responsibilities, should choose to walk away from every element of influence that it enjoys. That is a matter of concern not only for the Conservative party but for the whole country, because, for instance, before a summit there is normally a meeting, organised by political grouping, of Opposition leaders. I would have thought that a leader of the Conservative party—the Leader of Her Majesty's loyal Opposition—would want to meet other people in his political grouping, such as the new Chancellor of Germany. By leaving the European People's party, it is almost certain that the Conservative party will lose influence for not only itself, but this country.
	I hope that the hon. Member for Witney (Mr. Cameron)—or the right hon. Member, if he has become a member of the Privy Council yet—understands the system whereby groupings are organised in the European Parliament, although I wonder whether he does. If he does not, he might like to know that an alliance must be formed with at least 19 Members from at least five countries, because otherwise a party's Members stand no chance of being a rapporteur on a Committee, of being a Committee Chair or deputy Chair, or of getting the opportunity to speak for more than one minute in the European Parliament at any one time. All that will be impossible unless he can find new people to join him.
	I have looked through the list of non-attached Members of the European Parliament. It includes Philip Claeys, Koenraad Dillen and Frank Vanhecke. They are all from Belgium and are members of Vlaams Belang. In case anyone is uncertain about what that party is, it is the renamed Vlaams Blok party, which was condemned by the Belgian Government for being fascist and originally founded to ensure that there was an amnesty for former members of the SS. That party is one possibly ally.
	Another individual is Jana Bobosíková, who is from the Czech Republic. There are plenty of French MEPs: Bruno Gollnisch, Carl Lang, Fernand Le Rachinel, Jean-Claude Martinez and Lydia Schenardi. Of course, the two most famous members of that group are Jean-Marie Le Pen and Marine Le Pen. Those people are members of the Front National.
	Italy is even better. Its MEPs include Alessandro Battilocchio, Gianni De Michelis, Gianni Rivera, Luca Romagnoli and Alessandra Mussolini. That is great because the Conservatives will have a choice between the fascists and the communists, which is a delight. It is always difficult to talk about Austrian politics without mentioning Jörg Haider's old party, but the two possible Austrian candidates for supporting the Conservatives' new grouping are Andreas Mölzer and Hans-Peter Martin. Of course, there are four Polish Members representing the Polish Peasant party, none of whose names I will be able to read out.
	Finally, and perhaps most importantly, the Conservatives might want to combine with other British Members of the European Parliament. There is Ashley Mote, who represents the UK Independence party. There is James Hugh Allister, who represents the Democratic Unionist party—[Interruption.] They have one ally. There is also Roger Helmer, but the Conservatives might have difficulty getting him on board as they only lost him just last year. Finally, there is Robert Kilroy-Silk. It says on my list that he represents the UK Independence party, but I think that that is somewhat out of date.
	In a sense, I beg the Conservative party to reconsider its position on the issue for the simple reason that it will do its own future no good. This is not a caring Conservative party, but the most ideologically driven Conservative party that we have yet seen.

David Gauke: I thank the hon. Member for Rhondda (Chris Bryant) for his kind thoughts about the Conservative party, even though I did not agree with a word of it—[Interruption.] He was kind to address matters affecting the Conservative party, but we have more important issues to talk about today.
	Following the defeat of the European constitution through referendums in the Netherlands and France, there was an opportunity for Europe to readdress fundamental issues. The Government talked about a pause for reflection, but there has been no adjustment to the European model and no change. The European model continues in an integrationist manner. I wish to attend to one specific aspect of that with regard to criminal justice. We live in a world of consensus politics these days. We can probably find a consensus in the House and in the country on criminal justice. I think that we all believe that criminal offences that are committed in the UK should be defined by the House. Presumably, we believe that criminal penalties should be determined by the House and the UK courts. I hope that no one takes that to be an extreme or unrepresentative view. I hope that even the hon. Member for Rhondda supports the view that criminal justice and the determination of crimes and penalties should be a matter for UK institutions. The Government recognise that that is the case.
	In a debate last week in a European Standing Committee, the Under-Secretary of State for the Home Department, the hon. Member for Wythenshawe and Sale, East (Mr. Goggins), was clear on the matter, and I will quote him. He said:
	"It would be completely unacceptable for the operation of the criminal law in this country to be determined in Brussels or anywhere else."
	When pressed further, he said:
	"I am happy to reinforce the fact that changes to criminal law are a matter for this Parliament."
	I pressed him on concern about approximation of criminal laws. "Approximation of criminal laws" was the wording used in the European constitution. Despite the fact that that constitution is not proceeding, it appears that the European Commission is working on the basis that "approximation of criminal laws" is the correct approach. I asked the Minister whether this would mean that we would all have to follow particular European crimes, if Europe and other member states determined what a crime should be. Again, he was clear. He said:
	"I can visualise a situation where the United Kingdom might find itself in a minority of one but would still hold on to the view that criminal law is a matter for this Parliament. Whatever views are held by different hon. Members or different political parties, we should be able to hold a common view about that."—[Official Report, European Standing Committee C, 8 December 2005, c. 12–13.]
	I think that we have a consensus on this subject.
	We must have regard, however, to a European Court of Justice decision of 13 September. I shall provide a little background. The Commission adopted a proposal for a directive on the protection of the environment through criminal law. The Council of Ministers refused to adopt it. Eleven of the 15 member states claimed that the Community could not prescribe criminal penalties and instead adopted a framework decision. The Commission appealed to the European Court of Justice, which, as I have said, reached its determination on 13 September. The ECJ concluded that because environmental law is a first pillar matter, the imposition of criminal sanctions is a matter for the Commission and the Council of Ministers, acting sometimes through qualified majority voting and the European Parliament.
	The logic is that that approach should apply not only to environmental law but to other matters where the EU has power to legislate. That would include single markets, consumer protection and cross-border mobility. It has been suggested by some analysts in this area that criminal procedure should also fall within the European Community's ambit if it relates to a first pillar matter.
	On 23 November, the Commission issued its communication on its view of the ECJ judgment. It states that the judgment of 13 September recognises
	"the exclusive competence of the Community to adopt criminal law measures to ensure the effectiveness of Community law."
	It states also that the scope of the judgment
	"exceeds by far the field of the environment taking the whole range of community policies."
	It proposes not only to change the basis of legislation relating to environmental law, to scrap the framework decision and to change the bringing in of a directive, but to provide directives to cover areas such as money laundering, computer-related crimes, maritime pollution, corruption, human trafficking and euro and bankcard counterfeiting. That runs counter to the Government position that criminal law is a matter for the British Parliament. When I pressed the Minister in Committee on the matter, he was less certain than he had been about the position on criminal law and Europe, saying that
	"member states will have to consider it and come to their own conclusions. We are currently doing so."
	That was three months after the judgment. He went on to say that
	"we . . . wish that the ECJ had not taken the course that it did. We reflected very carefully about the consequences of that, and we retain very strongly the view that criminal offences and sanctions should be a matter for member states."—[Official Report, European Standing Committee C, 8 December 2005; c. 13–15.]
	That is the Government position. The British Parliament and all parties represented at Westminster believe that we should have exclusive power to determine and define criminal offences and the appropriate penalties. The European Commission thinks differently. That is not the case in general—the Commission is not arguing that it has the right to act in every area of criminal law, solely in substantial areas that fall under the first pillar does it believe that it has that right.
	The European Court of Justice agrees with the Commission, and there is nothing—if I am wrong, I would be grateful if the Minister would correct me—that we can do about that. The Commission's view has been confirmed by the ECJ and, in areas that fall under the first pillar, including European Community law, it is the exclusive right of the European institutions to lay down what the criminal law is, even though some of those areas are subject to qualified majority voting. Astonishingly, someone in this country can be convicted of a crime that has not been determined by the democratically elected Chamber but by European institutions. The penalties that apply will not be determined in the UK but in Brussels.
	That substantial constitutional change has taken place without a vote—there has certainly not been one in this country—or a debate, which is why I am keen to raise it today, and despite the fact that European integration, on almost every test, is unpopular and unsupported by the populations of the Netherlands and France. If a referendum on the European constitution were ever held in Britain, it would no doubt be defeated. There has been a substantial grab of power by the EU in the few months since the House last debated European matters. That has taken place almost unnoticed but, increasingly, criminal law is becoming a matter for Europe, not the British Parliament. That is consistent with the general direction that Europe is taking.
	Realistically, the constitution will not be ratified, but steps have still been taken to increase integration. We oppose the establishment of the post of European public prosecutor—I am grateful that the Government have made their position clear—but steps have none the less been taken at the European level to develop the proposal. There is a host of other areas in which similar action is under way, but I am grateful for the opportunity to highlight to the House a specific and important constitutional matter that has been changed without any democratic accountability whatsoever.

Kelvin Hopkins: We have had a long and interesting debate, in which a certain amount of change has taken place. The tectonic plates may not have moved, but certainly the sands are shifting, which I very much welcome. We are now talking about things that I used to raise a year or two ago, such as doing away with the common agricultural policy.
	For once I find myself substantially in agreement with my hon. Friend the Member for Rhondda (Chris Bryant). He emphasised that the EU budget is a mess and has been for a long time. It needs to be rationalised and made fairer. The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) spoke of his concern that structural funding might be taken away from Wales as a result of the entry of poorer new member states. He ought to be saying to the Government that every pound taken away should be replaced by the British Treasury. In his position, I would be arguing that strongly. Many Labour Members represent areas that receive such funding and, if it is taken away, it should be replaced by the Treasury.

Colin Breed: I am grateful to the hon. Gentleman for saying that. Does he agree that the way that money is spent is better organised and controlled in the region where it is to be spent, rather than being directed from central Government, particularly the Treasury?

Kelvin Hopkins: I agree. Perhaps democratic local government could have more of a say. In general, it is better for decisions to be made closer to where people live and where the funding is to be spent. Funding coming from the British Government rather than the EU would be better spent, and there is a parallel in the aid budget for the rest of the world. The Department for International Development does a much better job than the EU. If more funding went through DFID and less through the EU, the people who benefit would benefit more.
	I take issue with the hon. Member for Meirionnydd Nant Conwy on another point. He spoke about handbagging, as though we had started the argument that has caused the impasse in the budget. To go back to the politics of it, if he remembers, following the victory of the French people in their referendum—I put it that way because that is the way I see it—it was the French President who immediately wanted to deflect attention from what he saw as his failure by attacking the British rebate. He raised the issue.
	Shortly afterwards, I suggested in my modest way in a debate in the Chamber that if the French President wanted to open the question of our rebate, we should open the question of the CAP. If there were no CAP, there would be no need for a rebate. I do not suppose that the Prime Minister listens very much to what I say, but he took up the same theme not four or five days later, and I am very pleased about that. He put together a reasonable argument, but the handbag was first raised by the President of France, not by Britain.
	We must appreciate that the problems arise entirely from the CAP. It is time to consider a way of abandoning the CAP and to state our intent to get rid of it over a period, in a sensible and negotiated way, not in a big bang.

David Taylor: Is my hon. Friend aware of a document that has been produced by the Treasury and the Department for Environment, Food and Rural Affairs jointly that envisages just that as an option by 2020? Does he share that ambition and does he agree that it ought to be achieved earlier than that—perhaps by 2013?

Kelvin Hopkins: My hon. Friend took the words out of my mouth. I was about to suggest a five-year phasing-in period. We heard a sensible suggestion from the right hon. and learned Member for North-East Fife (Sir Menzies Campbell), who spoke about co-financing, whereby some subsidy comes from national Governments and some from the common agricultural policy. If that was phased in, it would reduce the level of the CAP by 20 per cent. a year over a five-year period and replace it as national Governments choose with national funding. We could adopt a phased, sensible approach and we might even persuade countries not to take actions that were unacceptable and that had damaging effects on the outside world.
	Much of the argument today has been made by hon. Members who would normally be the free traders—people who believe in economic liberalism. I do not share their view that the CAP is an instrument of economic liberalism and free trade and helps the third world. Even socialists have argued that. I do not believe that to be the case. If agricultural policy were repatriated, perhaps in a phased way, we could persuade individual countries, and certainly our own country, to reduce the level of overall subsidies to agriculture.
	At the same time, I do not think it politically feasible to suggest that others should abandon subsidising their own agriculture, which is fundamental to the culture and economy in some countries. One cannot say to the French, "Get rid of all subsidies and go for free trade in agriculture", because the effect would be politically devastating. We cannot expect the French to do that, because we would not withdraw selected subsidies from our own agriculture. I keep mentioning Welsh hill farmers—I hope this goes down well with Welsh Members—who are part of our culture. Small-scale livestock farming is beneficial to the countryside, and if a degree of subsidy is appropriate, let us proceed with that policy.
	Sometimes countries want to maintain a degree of agriculture for strategic reasons. The Czech Republic used to be able feed itself, but since it has joined the European Union, it cannot do so, which is upsetting.

Colin Breed: Does the hon. Gentleman believe that food security for every European country is an important aspect of agricultural policy?

Kelvin Hopkins: Some food security is necessary, but trade in agriculture will always occur, because we must import those things that we cannot produce.
	Agriculture should be decided democratically within each member state. Some member states would have larger sectors than us, but we would maintain our own distinctive style. For example, I would like to see us abandon the large-scale production of sugar beet. It would be beneficial if we started to produce biofuels, which provide CO 2 -neutral green energy. We could use the open spaces in East Anglia in which sugar beet is currently grown to produce biofuels, and my approach would involve national production.

Richard Bacon: Is the hon. Gentleman aware that sugar beet can be used as a biofuel?

Kelvin Hopkins: If we were to use it as a biofuel rather than dumping it on Malawi, I would be very pleased. Selling cheap subsidised sugar to the Malawians is not the way to proceed, when they can produce sugar themselves.
	I want briefly to discuss the effects of the CAP by considering EU agricultural spending per head in member states with comparable living standards to our own: in Ireland, agricultural spending—these are rough figures and might be out by a few euros here or there—amounted to €460 per head of population in 2004; in Denmark, the figure was €275; in France, €160; and in Britain, €65. Ireland, which has a similar standard of living to our own, has seven times the subsidy per head for agriculture; Denmark, which is a richer country than Britain, has four times as much subsidy; and France, a big country which is comparable to Britain, has two and a half times as much subsidy. The position on subsidies is nonsense.
	I agree with those hon. Members who have argued that we should provide more for the newer member states and if any redistribution takes place, it should be towards them and not the richer western European nations. If we compare the subsidy per head in Spain and Poland, which have similar populations but different living standards—Spain is considerably richer than Poland—Spain spends €150 per head and Poland spends €15 per head, which means that spending differs by a factor of 10.
	Hon. Members have discussed structural funding and I have examined the structural funding tables for 2004. The Spanish get 10 times more in structural funds than the Poles. I know that such funding is phased over a period. We keep saying that we want to be generous to those countries, but we are not being generous, and the fault lies with the CAP.
	Britain is being guilt-tripped about our rebate, which is justified on the basis that we are the least favoured by the CAP among the western European nations. The problem is not our rebate but the CAP. If we were to get rid of the CAP tomorrow, reduce contributions accordingly and repatriate spending, we could examine what we need to do and allow the situation to settle down. In that case, the budget would be more understandable, which would allow us to adjust it to make sure that poor nations receive according to their living standards and that we give according to our wealth.
	We should not accept any accusations of guilt from the big beneficiaries of the CAP and we should not back off. I am glad that my right hon. Friend the Foreign Secretary is negotiating for us, because I have great confidence in him. I am pleased that he is batting for Britain on this very sticky wicket. I am not sure that members of the Commission understand cricketing metaphors—if they played cricket, we might get a bit further. My right hon. Friend is doing the best job in difficult circumstances. I hope that he will emphasise that the main issue is not our rebate but the CAP. If we want to help the poorer nations more, we can, but first we have to deal with the CAP.
	We must move towards an EU budget—I have said this many times before in these debates—that is fair and equitable according to the living standards in the different member states, which means that the rich give most and the poor receive most. That is completely screwed up by one simple fact—the existence and operation of the CAP. I urge my Front-Bench colleagues to consider how to move away from the CAP and towards a more sensible approach to agriculture.
	Many people argue that, if we got rid of the CAP, member states would subsidise their agriculture even more and we would have a worse problem. I do not think that that would happen, because a Government's own taxpayers would have to bear the cost of the subsidies and they would be under pressure not to spend too much and to reduce those subsidies. At the moment, they are spending other people's money—largely British money, in fact. It is always easier to spend other people's money than one's own. In Britain, we would stop subsidising Tate & Lyle to the tune of nearly €200 million a year—a ridiculous amount. We would also stop subsidising some of the very wealthy farmers—the landed gentry who in the past were represented by Conservative Members. Indeed, royalty, including the Duchy of Cornwall, gets these subsidies. If we did that, other countries might do the same, especially if we appealed to them to play their part in helping the world's poor to find their way forward.
	I would go further. I am not automatically a free trader. If a poor country wanted to restrict imports of subsidised agricultural products from countries such as France, we should let them do so in order to protect their own farmers. Simple free trade and forcing them to open their markets to our goods will not help them in any way. There are two sorts of protectionism—by the rich to help themselves and by the poor to ensure that they have a chance in this difficult and competitive world.

Peter Bone: Thank you, Madam Deputy Speaker, for calling me to speak in this European affairs debate. It is a great pleasure to follow the hon. Member for Luton, North (Kelvin Hopkins). I listened very carefully to everything that he said, and I am afraid that I could not disagree with one word.
	The hon. Gentleman covered some of the topics that I wanted to address. As he said, it is extraordinary that we are going into the World Trade Organisation negotiations with a European Union position whereby we are not prepared to make proper cuts to the tariffs, and yet we are asking some of the developing countries to make huge cuts in their protection. That is "Alice in Wonderland" politics.
	I have learned two important things while listening to the debate. First, the new leader of the Conservative party must be absolutely right to take Conservative MEPs out of the European People's Party because his decision has been so hotly disputed by Government, Liberal and Plaid Cymru Members. That is good enough for me—he must be right.

Colin Breed: Does the hon. Gentleman accept that the proposal has been roundly abused by Conservative Members of the European Parliament?

Peter Bone: That intervention simply proves that we must have a party that speaks with one voice in Europe. Perhaps the Members of the European Parliament should be more in tune with the new leader.
	Let us think about the pause for reflection. I understood why that happened after the French and Dutch victories over the constitution, but it must have ended by now. Early in his speech, the Foreign Secretary let slip that the euro is dead and the pound is safe. That must be new Government policy. It is good news. If nothing else, I have learned that, and I hope it is widely reported.
	What is the European Union? Someone said that it was a little like a large public limited company. It spends a great deal of money and has a huge budget. I thought about that and realised that there is no proper control over the plc. The auditors have not signed the accounts for 11 years. If the EU genuinely resembled a plc, it would have gone bust and its directors would have been imprisoned. Clearly, that was not the right definition.
	I therefore thought that I would ask my son Thomas. He is a bright lad, but he is only four. I sat him down and asked, "Thomas, can you tell me what a large area of land is called that has a president, courts, a parliament and taxes people?" He asked, "Is it a piece of land that has a flag and. Members in a parliament?" When I said "Yes", he replied, "Don't be silly, Daddy, that's a country." Unfortunately, that is way that the EU has gone.
	Labour Members have expressed the federalist approach with some clarity. I do not doubt their sincerity and it is right that they make their point. They believe in a central country called Europe with nation states that become regions, rather like a united states of Europe.

David Taylor: Does the hon. Gentleman accept that Europhiles are not confined to the Labour party and that Eurosceptics are not confined to the Conservative party, as evidenced by the fine speech of my hon. Friend the Member for Luton, North (Kelvin Hopkins)?

Peter Bone: All I said was that, today, the federalist case was made eloquently by Labour Members. However, I do not believe that they are right. We need a Europe of nation states that is based on free trade and co-operation. I welcome enlargement—I should like the EU to be enlarged much more and include the North American Free Trade Agreement area so that we have a proper free trade area and not a superstate in Europe.
	The budget surprises me most. When we joined the European Economic Community, nobody spoke to me about a budget of £600 billion. That is so much money that nobody can comprehend the sum. The EU now is much nearer the federalist position than mine. I cannot believe that it simply happened, but it did. How did we get into that position? There was no great debate in this country about whether we should be part of the EU. No referendum took place. Suddenly, one sunny winter's morning, we woke up in the EU.
	How did it happen? I put it down to the salami approach. If we try to eat a salami sausage in one go, we spit it out in disgust. It is horrible and we cannot possibly taste it. Yuck. Some of the powers of this country have gone to the EU slice by slice. We can put up with each piece individually, but over the years we will find that we have become part of the superstate of the European Union.
	The elite of Europe—the Commissioners and the failed politicians who run the European Union—have got a bit ahead of themselves and started to believe their own spin. They said, "Why don't we have a constitution, and why don't we put it to the people of Europe?" Of course, that is where they fell down because the people of Europe rejected it. I have a real fear that the bureaucrats, Commissioners and politicians in Europe are simply going to say, "Okay, we can't get this through using a constitution, so we'll use the salami approach that has worked so well over the years. We'll just put the bad bits in piece by piece, so that nobody really notices."
	I want to talk about the democratic deficit in the European Union. We have heard that countries are queuing up to come into the EU, and that may well be right. However, it is their Governments who are queuing up to come in, and they never ask the people. If the European Union can impose such regulations and conditions on countries coming into the union, why cannot it impose the simple regulation that a country has to hold a referendum of its people before it can come in? We would then know that that country really did want to come in.
	That is a suggestion for the future, but we have a problem in this country now. We were never asked whether we wanted to be in the European Union. There is a strong argument for holding a referendum every 10 years to see whether the people of this country want to stay in the EU. That would take the issue out of the daily political argument, because people would know that, every 10 years—

David Taylor: What country does the hon. Gentleman live in?

Peter Bone: Well, it seems to me to be a reasonable approach.
	We talked about Romania and Bulgaria earlier. They have just escaped from the yoke of the Soviet Union, and the great thing is that they now have democracy. However, they have been brought into the European Union without any consideration of their people's wishes. That seems fundamentally wrong.
	I want briefly to talk about the £600 billion budget. We have talked about the budget largely in generalities today, but there has been a lot of spin about the rebate. Can we just look at the actual figures? In 2005, this country was taxed £12.7 billion, and at the end of next year, we might get back £3.6 billion. So the taxpayers of the United Kingdom will have paid £9 billion in 2005 alone to belong to the free trade area called the European Union. That £9 billion could have been spent on many things in this country. I would have liked to see a new hospital and a new secondary school in my constituency, for example, and they would have cost only a fraction of that £9 billion that we are giving to the European Union. People will say, "Ah, but we get a lot of that money back." According to the figures, we will get £4.8 billion back, but we get it back to spend on the projects that the European Union decides we can spend it on. So we give the European Union our money, and it makes bureaucratic regulations to determine what we can spend it on. What a weird world we live in.
	There has been much talk of the Prime Minister giving away our rebate, but I do not believe for a minute that he will do so. I am sure that he will pull a rabbit out of the hat. But let us just assume that he did give it away. The United Kingdom would then have to pay five times the amount that France pays into the European Union. This is a topsy-turvy world and the Government have failed in their presidency of the European Union. It is time that we got the European Union sorted out, and time that we got the common agricultural policy scrapped.

Nia Griffith: I very much welcome the publication today of the UK presidency's proposal on the financial perspective 2007–13. Leading European Union member states in agreement on such an immensely important issue as the budget for 2007–13 is tremendously challenging. It is particularly challenging when we remember that any agreement must be unanimous and that every member state wants to go home with a victorious message. Everybody wants to be a winner, and that is all the more difficult now that we have an EU of 25.
	Our proposal shows magnanimity and generosity and leads the way. We have put an offer on the table to start the drive towards tackling CAP reform. It is a sensible offer, which reflects our increased prosperity as well as our sincerity and determination to do business. The way to ensure that that document is seriously and sensibly considered is to make sure that as many member states as possible have a good message to take home. No fewer than 13 individual member states are specifically mentioned in the proposal, as they will benefit from specific funds such as the regional development or rural development funds. In addition, there is the progressive proposal that will ensure that new EU states can access funds more easily, with less reliance on match funding—real funds that they can use, rather than theoretical funds that they cannot access. That is a good message to take home. Furthermore, several of the richer countries not mentioned in the proposal will welcome the overall reduction in the overall percentage of EU funds, which will be a good message for them to take home.
	It is vital that the financial framework for 2007–13 is decided as soon as possible, so that all member sates can begin their planning in good time to be able to take advantage of the funds available in 2007. Not least, of course, we need an early settlement, which will mean that forward planning can begin in our areas, which have, until now, benefited from objective 1 funding, and which will benefit from transitional funding in 2007–13. Those areas include west Wales, the Welsh valleys, the Scottish highlands, Northern Ireland and parts of England. I also welcome the Chancellor's assurances that if EU funding to those areas is reduced, the Treasury will ensure that the shortfall is made up to ensure the continuity of the excellent economic progress that has been made in those areas.

Colin Breed: Does the hon. Lady agree that it is not only important that the Treasury provides the money to make up any shortfall, but that the control and direction of the spend of that money lie in the region concerned?

Nia Griffith: Indeed. It is extremely important that there is a firm partnership between UK-level, EU-level and regional-level auditing.
	That brings me, lastly, to the good message that we will bring home. What have we done? We instigated the proposals, put the UK rebate on the table and paved the way for CAP reform. We proposed a reduction in our rebate that reflects not only our prosperity but our determination to make real progress on EU budget reform. That reduction, however, has been linked to an overall reduction in the EU budget.
	I therefore welcome this realistic document, and I very much hope that, later this week, my right hon. Friends, through this document, will make substantial progress towards setting the EU on the path to genuine budgetary reform.

Graham Brady: As ever, we have had an interesting and wide-ranging debate. I am pleased to follow the hon. Member for Llanelli (Nia Griffith), not least because she managed to squeeze so much into three minutes, and I am sure that there would have been much more had she had more time. Llanelli, of course, has produced many great parliamentarians, not least my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard).
	Earlier, we heard from the right hon. and learned Member for North-East Fife (Sir Menzies Campbell), who endorsed our position that the rebate should only be negotiated in return for CAP reform. He raised the prospect of reform of the CAP to return its funding streams to national Governments. That view was later endorsed by the hon. Member for Luton, North (Kelvin Hopkins), whose contributions to these debates the Opposition very much value, although we do not always agree with everything that he says. I know that he is reassured by that.
	The hon. Member for Leicester, East (Keith Vaz), a former Minister for Europe, spoke about the Foreign Secretary's panache and charm and about having voted for him in The House Magazine awards. We were privileged to hear what might well be his last intervention from the Back Benches. He is clearly working very hard to return to his earlier brief, although he is currently looking after the Westminster kids' club party, where I would have been were I not in the Chamber, as one of the co-hosts.
	The Foreign Secretary advised Members to back a horse rather than putting money on his chances of success in the budget negotiations. Some Members may find that a bit rich, given the Foreign Secretary's own readiness to gamble £6 billion of British taxpayers' money this week in the European Council.
	My hon. Friend the Member for Stone (Mr. Cash) said that enlargement would inevitably lead to a looser, freer European Union. My hon. Friend the Member for Wellingborough (Mr. Bone) spoke passionately on behalf of his constituents, particularly the younger ones—notably one Thomas Bone. He put the case for much wider free trade, bringing in countries outside the EU. We strongly endorse that.
	My right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) rightly reminded us that for 11 years the European Court of Auditors has refused to sign off the EU's accounts. My hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) spoke of the way in which the EU is extending its influence and powers even without the constitution that was rejected earlier in the year. My hon. Friend the Member for North Dorset (Mr. Walter) expressed concern about the failure of the British presidency to make itself accountable to the Assembly of the Western European Union, not once but twice. He also issued a plea for the small but necessary funding in that regard. I am sure that the Minister will sign a cheque as soon as he leaves the Chamber.
	The hon. Member for Preston (Mr. Hendrick) produced the astonishing revelation that he still believes that Britain will join the eurozone. We hoped that he would go on to tell us what he expected Father Christmas to bring him shortly, but sadly he left us in suspense.
	Opening the debate, my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) was the living embodiment of the new politics. [Hon. Members: "Where is he?"] He will be back shortly. The winding-up speeches began slightly earlier than expected.
	My right hon. Friend warmly congratulated the Foreign Secretary on the opening of Turkish accession talks, and I am delighted to echo his tribute. [Hon. Members: "Here he is!"] As ever, my right hon. Friend is on time. It is just that we started a little early.
	Not only will Turkey's eventual EU membership bring benefits; the process of reform and development that will precede it is important, and the Minister and the Foreign Secretary can be proud of their role in that process. I suspect that they will also be relieved—relieved that, whatever may happen over the next few days, there will be at least something to show for the six months of the British presidency. It is all too clear that, to date, no one in the European Union is terribly impressed by anything else that they have done.
	There is too much relevant material for me to quote from all of it, but I shall cite one or two of the comments that have been made. The French Minister for European Affairs recently said:
	"Five months have passed and there is still no proposal likely to shape an agreement. There is not even a proposal setting out figures. Many delegations were surprised by this method of conducting budget negotiations."
	The Belgian Foreign Minister was quoted by diplomats as saying:
	"We are sitting here wasting our time."
	The Portuguese Foreign Minister said:
	"They have done nothing about the financial prospects . . . We are not going to get any numbers today, just words."
	One Brussels civil servant is quoted as saying:
	"the British presidency—you don't see it, you don't feel it, it's very curious".
	Mr. Marco Incerti, an EU expert at the Centre for European Policy Studies, said:
	"the famous speech by Tony Blair raised expectations, but those that criticised Blair for just saying nice words are being proved right".
	That was reported in The Times on 22 September.
	The last comment, from Mr. Incerti, hits home hardest. As was pointed out by my right hon. Friend the Member for Richmond, Yorks, our EU partners have learnt something about the Prime Minister and his Government over the past six months—something that it has taken the British people much longer, with far more pain, to discover. They have seen the dramatic difference between the fine words and high aspirations in the Prime Minister's speeches and his dismal record of underachievement, lack of delivery and lack of direction.
	It all started so well. On 23 June, the Prime Minister told the European Parliament:
	"Just reflect. The Laeken Declaration which launched the Constitution was designed 'to bring Europe closer to the people'. Did it? The Lisbon agenda was launched in the year 2000 with the ambition of making Europe 'the most competitive place to do business in the world by 2010'. We are half way through that period. Has it succeeded? I have sat through Council Conclusions after Council Conclusions describing how we are 'reconnecting Europe to the people'. Are we? It is time to give ourselves a reality check. To receive the wake-up call. The people are blowing the trumpets round the city walls. Are we listening?"
	That wake-up call came in June with the referendums in France and the Netherlands. But six months on, the British Government show every sign of having overslept. Instead of replacing the crisis of political leadership with a real vision and a new direction—a move towards a more flexible European Union—we have had six months of business as usual. We have had the same old arguments, the same resort to horse-trading and the quest for a deal that makes everyone equally unhappy.
	In recent weeks, we saw the undignified spectacle of the Prime Minister engaged in what Bronwyn Maddox of The Times described as a
	"doomed last-gasp diplomatic mission"
	to find a friend somewhere in eastern Europe. We should note the danger of agreeing to what the right hon. Member for Rotherham (Mr. MacShane)—sadly, he is not with us today—described to The Daily Telegraph as
	"a one-sided deal that even out-and-out pro-Europeans like me would find it hard to support."

Hugh Bayley: What proposal would the Conservatives have come up with, had they been in government, to achieve a budget settlement?

Graham Brady: We very much agree with the Prime Minister's aspiration, but the crucial difference is how hard one is prepared to negotiate. My hon. Friend the Member for Ashford (Damian Green) summed up the situation brilliantly the other day when he described the Government's stance as a "pre-emptive surrender". They have been prepared to put concessions on the rebate on the table; originally, they said that they would do so only in return for CAP reform. However, without any promise of reform—without even a promise of discussion of reform—they have been prepared to cave in and to give further concessions.

Hugh Bayley: rose—

Graham Brady: The hon. Gentleman can try again.

Hugh Bayley: The hon. Gentleman must have misheard my question. What proposal would his party have come up with that, in his view, would have broken the deadlock?

Graham Brady: We would have stuck to the Government's policy and not caved in at the first opportunity. They set out a very good, solid negotiating position in June. The Prime Minister spoke in the European Parliament and there was a great deal in what he said that we endorse and would be happy to support; but instead, the Government caved in at the first opportunity.
	The day before the Prime Minister spoke to the European Parliament, the Chancellor of the Exchequer spoke in his Mansion House speech of the pressing need for radical reform of the EU. He spoke of a "new urgency" and of
	"questioning not just what is the right policy for the European economy but what is the right balance, economically and politically, between national decision making and European decision making to fit us to meet these challenges. So questions that Europe might find it easier to avoid—how we reform inefficient state aids, especially in farming; how we might break out of all too the familiar stand off in trade with the one other advanced global power, north America; how, with 20 million unemployed and almost half of them half long term unemployed, we reshape and modernise the European social model—are questions that must be addressed if we are to meet the challenge of globalisation."
	He continued:
	And we should start with agriculture. In 2013 Europe will still be spending almost 40 per cent of its budget on protecting and sheltering inefficient and counterproductive agricultural subsidies. The reason why Tony Blair has made the reform of the budget such an important issue is that the failure to reform the budget impedes the very economic changes we need."
	The Prime Minister and the Chancellor were right to prioritise reform of the CAP, but that makes it all the more startling that not a single concrete proposal emerged until a week or so ago. A joint document from the Treasury and the Department for Environment, Food and Rural Affairs—the Foreign Secretary referred to it earlier—set out the costs of the CAP, which are staggering on the Government's own assessment. It states that the
	"economic analysis, even on conservative estimates, suggests the CAP will leave the EU economy around €100 billion poorer over the period of the next financial perspective (2007–13); . . . The financial cost to ordinary citizens—
	this is according to the Government's own document—
	"is much greater—around €100 billion each year, according to OECD estimates, half from taxpayers and half from consumers owing to higher food prices. This is an average cost to an EU family of four of about €950 a year, with only around €20 of this spent as EU money on targeted environmental programmes".
	The Government were right to flag up the huge importance of fundamental reform of agricultural policy, but yet again, they have achieved nothing to that end during the British presidency.

Several hon. Members: rose—

Graham Brady: I have an embarrassment of choice before me, but I give way first to the hon. Member for Preston.

Mark Hendrick: The hon. Gentleman fails to refer to the £3.5 billion to £4 billion that will be saved from the CAP budget by the sugar reforms.

Graham Brady: That, however, is not the fundamental reform of the CAP that the Government talked about at the beginning of the presidency, and it will not save the €100 billion relating to the next financial perspective or the €100 billion a year that the Government acknowledge to be the cost of the CAP.
	A pathetic signal of defeat and pessimism in respect of the Government's negotiations is the fact that the vision set out in the Government paper focuses on
	"where we need to be in 10 to 15 years time, and why. It does not set out a route map for getting there."
	They have no idea—and not just for the six months of the British presidency—about how to get to where they want to be in 15 years' time.

William Cash: On that very question of the route map, I entirely agree with my hon. Friend's comments on the Government's position, but does he accept that clear decision-making will be necessary on the Conservative Benches in order to reclaim the powers that are needed to give effect to economic enterprise, to engage in open markets, deal with the CAP and ensure that democracy remains where it should be—namely, in this House?

Graham Brady: I am grateful to my hon. Friend and I look forward to further more, detailed conversations with him on that subject.
	Here lies the real tragedy of this EU presidency. It is not that Conservative Members regard it as a failure or that the Government have damaged their relationships with so many EU partners; the real tragedy is that they have failed to live up to their own laudable objectives. If, following the rejection of the constitution, there was a crisis of political leadership in Europe, it is worse now. If there was a pressing need for economic reforms, it is even more pressing six months on. If there was an overwhelming need for fundamental reform of the CAP in June, the need for a better world trade deal makes the case even stronger today.
	It was notable that even the Foreign Secretary made little effort to claim that the presidency has been a great success. We are keen on political consensus, but we are sorry to see the firm consensus developing around Europe—that the British presidency has been a failure. It may be that no deal is achieved on the budget this week. If that is so, the Government will have squandered reserves of good will for nothing. If, however, a deal is done, it looks increasingly as though it will be the worst of all possible worlds—bad for the new member states, no reform of the CAP and billions more being taken from British taxpayers.
	We agreed with so many of the objectives set out in June, so it is with real sadness that we move towards the end of this British presidency with no real prospect of agreement on the key challenges facing Britain and the European Union.

Kim Howells: May I add my words of welcome to the right hon. Member for Richmond, Yorks (Mr. Hague), particularly as he and I entered the House together on the same day? I also welcome the hon. Member for Altrincham and Sale, West (Mr. Brady) to his new position. It is good to see them both on the Front Bench.
	I apologise for the absence of my right hon. Friend the Minister for Europe, who is required to be in Strasbourg today. Instead, Madam Deputy Speaker, you are stuck with me, fresh from witnessing the devastation of the earthquake in Kashmir and the fight to relieve poverty, corruption and the corrosive effects of the heroin trade in Afghanistan. Those scenes put this debate in perspective: it is very good to be back in Britain and in Europe—and to be Welsh is very heaven—because hon. Members should try living out there.
	As in every debate preceding a European Council, we have had a vigorous discussion about the key issues that European leaders will address tomorrow, and about many other matters in which the EU plays a role. Many important questions have been raised, and I shall attempt to answer at least some of them.
	As my right hon. Friend the Foreign Secretary set out so clearly, the focus of tomorrow's European Council will be to agree a budget for the European Union for the period from 2007 to 2013 that is fair and meets the needs of an enlarged EU in an increasingly competitive global economy. My right hon. Friend the Prime Minister stated at the start of the UK presidency that, to get the budget right, the EU needs to decide what direction it takes in the future. Under our presidency, we have begun that debate.
	At the informal meeting at Hampton Court in October, EU leaders agreed to take forward, in a number of key areas, an agenda to meet the challenges of globalisation. Those areas include research, development and innovation, as well as university reform and the university sector in Europe. I shall come to those important points in a moment, as they were raised by the right hon. Member for Richmond, Yorks. Other key areas include the development of a European energy policy and the impact of changing demographics in Europe.
	In Brussels tomorrow, EU leaders will discuss how to follow up the Hampton Court agreement. They will also consider progress on the EU's strategies to promote growth and create new jobs, and to manage migration and curb illegal immigration. The leaders will also consider ways to take forward the important agreements reached at the UN conference on climate change in Montreal. In that connection, I am sure that I reflect the feelings of the House when I take this opportunity to congratulate my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs. She led the EU delegation in Montreal, and played a crucial role in bringing about those agreements.
	I turn now to some of the questions raised in the debate, in which there was much discussion about economic reform and how that can be taken forward. I understand that the job of Opposition Front Benchers is to give us a battering whenever they can and, in opposition, we did the same thing. However, it is churlish to say that we have not worked very hard over the past six months to make progress towards a focused and results-oriented set of reforms that will create jobs and boost skills. Our priorities have included better regulation, and real progress has been achieved on impact assessment and simplification. Another priority has been the chemicals directive, on which we reached agreement on Monday, and progress has also been made on the services directive and the working time directive—both of which I know have been of great concern to the House.
	Adapting to globalisation is one of the biggest challenges facing Europe. We have worked to develop a consensus on how we should respond to these challenges through economic reform, and we have made some progress. At the most recent ECOFIN meeting, EU Finance Ministers built on the discussions at Hampton Court and for the first time set out their views on the reforms needed to maximise the benefits of globalisation. Those reforms were raised by many hon. Members in the course of today's debate, and they include improving the regulatory environment, completing the single market in services, and achieving an ambitious and balanced multilateral trade agreement. They also feature improved regulatory co-operation.
	Our conference on better regulation in Edinburgh provided an unprecedented opportunity for business, officials and Ministers to meet and discuss the twin themes of competitiveness and consultation. In November, EU Finance Ministers agreed on a common method for measuring the administrative costs of regulation, and supported Commission proposals for a lighter touch and more effective regulatory framework in the financial sector. The Austrian and Finnish presidencies are committed to carrying that work forward, and that is something that we ought to remember.
	The right hon. Member for Richmond, Yorks quite properly credited my right hon. Friend the Foreign Secretary with the Turkish accession negotiations, and I want to reflect that as well. He also spoke about something about which I feel very strongly. He talked about the way in which, all too often, we have genuflected towards the Lisbon agenda but failed to make real progress in key areas. The right hon. and learned Member for North-East Fife (Sir Menzies Campbell) also spoke eloquently about that issue and how we might lift that agenda and take it forward, and we have been trying very hard to do so.
	I have told the right hon. Gentleman before that every leading economy in the world has great universities. The way in which European universities have been sliding down the world scale has troubled me. The lists of the world's best universities are dominated by the Americans and British. I still have the scars of taking the Bill on tuition fees through the House, but it is no coincidence that the extra funding that is going into British universities is helping them to remain in the first division of universities in the world.
	I very much hope that the right hon. Gentleman will take that very difficult argument into the Conservative party. It took a lot of courage to take the Bill on tuition fees through the House, and I hope very much that he will argue for a consensus on the issue. We must get more funding into our universities. We must ensure that our universities right across Europe interact with the economy around them, so that we can start to address the Lisbon agenda issues; we are not doing so at the moment.
	Hon. Members mentioned Will Hutton and Wim Kok's committee's report on competitiveness—something that we must work very hard to take forward, and the right hon. Gentleman was right to highlight it. I remember attending the Council of Ministers when, as a rapporteur, Will Hutton gave his report on that key issue, and the body language showed that Ministers were either not concerned with the subject or too frightened to take forward that agenda in their own countries. It is extremely important to understand that issue, and I am very glad that it was raised.
	We have seen the publication of the document on the future of agricultural policy, drafted by the Treasury and the Department for Environment, Food and Rural Affairs. It came in for a bit of stick because of the lateness of its publication. I do not think that six months is a very long time in which to draft such a document—it is a difficult one to draft—and to come up with answers about how to reform the CAP is not easy, as we have all learned from the debate.
	The right hon. Member for Richmond, Yorks asked about the European Court of Justice judgment on the protection of the environment using criminal law and whether that represented a new power for the Commission. We should look closely at the whole ECJ judgment, which reiterates that criminal law is not generally a matter for the European Community. Only in specific circumstances where criminal sanctions are necessary to uphold European Community rules can the Commission introduce proposals, but they must still be approved by member states. The judgment interprets the current treaties; it is nothing to do with the constitutional treaty. I hope that that helps.

David Heathcoat-Amory: Will the Minister give way?

Kim Howells: I have almost no time. I will to try acknowledge something that the right hon. Gentleman said earlier.
	The right hon. and learned Member for North-East Fife raised, as he put it, the lack of substantial achievement during our presidency. He spoke, quite properly, of course, of geopolitics, the new power across the globe—as did my hon. Friend the Member for Ilford, South (Mike Gapes), who is absent from his seat—and the rising economic and political power of China and India.
	Other Members drew our attention to one of the basic notions that drove forward the growth of the EU, and which I am old enough to remember: there were two great poles of influence—America in the west and Japan in the east—and we would be competing with those great powers. There are at least four great powers now. There is no question but that India and China will be very different powers. The right hon. and learned Member for North-East Fife drew our attention to the important point that they will be great political powers. How should we come to terms with them? How do we begin to compete, for example in research and development? How do we pool together for the great projects in which we shall certainly need to be involved? Whether in communications or science-based industries, there are big questions and I am sorry that we have not had time to discuss them. They are at the core of what we should be doing in the EU from here on, which returns to the point made by the right hon. Member for Richmond, Yorks about the Lisbon agenda. We need to concentrate hard on that. If we want a mission, there it is.
	I am about to contradict myself. Members spoke about the great single market inside Europe, but in fact it has by no means been completed. I come from the energy sector—try selling electricity to the French, although I would not wish to name a country. Sure enough, the market has been pushed forward, even more starkly so for financial services. In the UK, we excel in financial services and if we were let loose on many of the still highly protected markets in many European countries we would create many more jobs in this country, making economies abroad much more efficient and growing those markets. We must certainly take that forward. The single market in services has only just been completed and the implementation is only just beginning in many countries. We need to consider that.
	My hon. Friend the Member for City of York (Hugh Bayley) raised an important issue. We have been talking in that special Euro language, to which the hon. Member for Stone (Mr. Cash) and I have listened so many times. My hon. Friend the Minister for Europe is not in the Chamber; he speaks that special euro language—the problem is that half the time I do not understand a word of it. My hon. Friend the Member for City of York said, in effect, "Hang on a minute. Actually lots of money has been allocated to the new economies in the east but they can't spend it." They cannot spend it because they do not yet have the governance capacity to do so.
	The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), who is a friend of mine, knows that in its first year the Welsh Assembly was paralysed by arguments about how the European structural and cohesion funding should be spent. That was a difficult issue. The point is important: we are dealing with a great continent where people are at different stages and there are problems of underdevelopment. We must remember that and make careful judgments.
	The right hon. Member for Wells (Mr. Heathcoat-Amory) and the hon. Member for Stone made challenging, thoughtful speeches. The hon. Gentleman said something that was reflected in the words of my hon. Friend the Member for Luton, North (Kelvin Hopkins). He said that we might not be seeing seismic shifts, but that there were shifts in the sand and we were talking a much more pragmatic language. I, too, sensed that during the debate. I was extremely interested, for example, in the idea that we should look at how institutions respond to the great challenges that have been mentioned—whether the growth and influence of China and India or our ability to compete in big international markets. We have to ensure that the institutions evolve to meet those challenges.
	The hon. Member for Altrincham and Sale, West is an excellent parliamentarian and debater, but my hon. Friend the Member for City of York put his finger on something when he asked the hon. Gentleman what the Conservatives would have done. What did the hon. Gentleman say? He said that they would have stuck to the Government's policy. That is pathetic. That is the same ancient whinge about the EU—that is all. Look at all the years the Conservatives were in power. What did they do about reforming—
	It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.

ENVIRONMENTAL AUDIT

Ordered,
	That Mr Peter Ainsworth be discharged from the Environmental Audit Committee and Mr Tim Yeo be added.—[Rosemary McKenna, on behalf of the Committee of Selection.]

ADMINISTRATION

Ordered,
	That Mr Patrick McLoughlin be discharged from the Administration Committee and Mr Andrew Robathan be added.—[Rosemary McKenna, on behalf of the Committee of Selection.]

PETITIONS
	 — 
	Herceptin

Phil Willis: I wish to present a petition, which has been organised by Hazel Bennett and signed by more than 5,000 people in Harrogate and Knaresborough and the surrounding areas, about the plight of women with diagnosed breast cancer who cannot obtain access to the drug Herceptin on the national health service.
	The petition
	Declares that Breast Cancer is a killer disease affecting thousands of women each year and that the life saving drug Herceptin is currently available to patients who are privately treated but will not be available to NHS patients until mid to late 2006.
	The Petitioners therefore urge the Secretary of State for health to make Herceptin immediately available to all NHS patients who, in the opinion of their specialist clinician, would benefit from Herceptin.
	And the Petitioners remain, etc.
	To lie upon the Table.

Royal Ordnance Factory (Puriton)

Ian Liddell-Grainger: I have a petition from the residents of Bridgwater that is signed by 2,500 people.
	The petition
	Declares that the Royal Ordnance factory at Puriton should not be closed; that the jobs it provides are vital to the Sedgemoor economy and that the plant is vital to the nation's defences.
	The Petitioners therefore request that the House of Commons call upon BAE and the Ministry of Defence to save the Royal Ordnance factory at Puriton.
	And the Petitioners remain, etc.
	To lie upon the Table.

Post Boxes

Ian Liddell-Grainger: I am sorry, Madam Deputy Speaker—it is a job lot.
	I present a petition from the villagers of Westonzoyland that is signed by 490 people.
	The petition
	Declares that Westonzoyland should have post boxes adequate to deal with the needs of 700 dwellings and many small businesses. The Post Office and adjacent post box closed on 23rd September. Since that date there has only been one very small box in Monmouth Road. This is some distance from the centre of the village and invariably full to overflowing with letters long before the collection times. The Petitioners further declare that there is not another box within three miles in any direction and that the village urgently needs at least one large box, conveniently placed to the majority of residents.
	The Petitioners therefore request that the House of Commons urge the Government to provide at least one large post box in the village of Westonzoyland, conveniently placed to the majority of residents.
	And the Petitioners remain, etc.
	To lie upon the Table.

Community Hospitals

David Taylor: North-West Leicestershire is fortunate to have two fine community hospitals. One is in Ashby-de-la-Zouch, which is my birthplace, and the other is a 96-bed hospital at Coalville. A primary care trust review is under way on the future of one specific ward at Coalville hospital, which is the home for numerous patients with chronic mental health problems. Such uncertainty has triggered a local campaign, part of which is this petition.
	The petition states:
	To the House of Commons,
	The Petition of 3,170 residents of North West Leicestershire and nearby areas
	Declares that
	Despite the present financial pressures on primary care trusts, their community hospitals must continue to play a key role in the provision of mental health services and closures of dedicated wards providing long-term residential care (or their amalgamation with other similar facilities elsewhere) should be avoided at all costs.
	Further declares that
	They strongly oppose any amalgamation of Coalville Hospital long term care services with Loughborough Hospital and any closure of CCH (Thringstone) Ward 4.
	The Petitioners therefore request that the House of Commons urge the Secretary of State for Health to ensure that there is adequate finance for the continued provision of high quality residential mental health care in local community hospitals.
	And direct Charnwood and North West Leicestershire primary care trust to undertake all due consultation with families of patients in local long-term residential mental health care and take into account their needs and wishes in the review of mental health care provision.
	And the Petitioners remain, etc.
	The petition has been signed by Pauline Chamberlain, who has worked hard to organise it, and myself, as the local Member of Parliament.
	To lie upon the Table.

Integrated Kent Rail Franchise

Motion made, and Question proposed, That his house do now adjourn.—[Mr. Coaker.]

John Stanley: Madam Deputy Speaker, do I have five minutes of injury time as a result of the petitions?

Madam Deputy Speaker: The debate will end at 7.35 pm. The right hon. Gentleman has the additional five minutes.

John Stanley: I am grateful, Madam Deputy Speaker.
	I am glad to have secured the debate on the integrated rail franchise for Kent and to be able to cover some of the surrounding counties as well. It will affect the lives, journeys to work and rail use of many hundreds of thousands of people in my constituency and surrounding constituencies. I am in some difficulty in having the debate at this moment, although I wanted it as quickly as possible, in that I have sought a copy of the franchise agreement between the Department for Transport and GoVia, which was announced as the successful franchisee by the Secretary of State on 30 November.
	GoVia has told me that it cannot provide the document—it is debarred by the Department for Transport from providing it—and that some details are still under negotiation. It is difficult, therefore, for me to know precisely what service details and service requirements have been imposed on GoVia. I hope that the Minister will be able to assure me that it is an extremely important document and that GoVia needs to be publicly held to account for its performance under the contract. I hope also that he will tell me that the document will in due course be made public, either in full or, if there are some necessary deletions of financial information on the grounds of their being commercial in confidence, with deletions. I trust that he will be able to assure me that the document will be made public and that a copy will be placed in the Library.
	I shall start with the service level commitments on the four main railway lines that run through my constituency. The four lines are the Malling line to and from London, the Tonbridge-Hildenborough line to and from London, the Edenbridge line to and from London and the east-west line from Tonbridge through to Edenbridge, Redhill and Gatwick.
	The all-important Malling line covers the stations of East and West Malling and Borough Green in my constituency. In all three areas there has been growth. The most dramatic growth has been in the Kings Hill area of my constituency, which is close to West Malling station. In effect, a mini-new town is under construction as a result of a development by what is now called Liberty Property Trust UK, in conjunction with Kent county council, on what was the extremely famous and historic RAF West Malling airfield, from which a major part was played in the second world war during the Battle of Britain.
	The development of Kings Hill has led to a huge increase in demand for rail services from West Malling station. The managing director of Liberty Property Trust has told me that at Kings Hill there are now about 5,000 people working there and some 3,500 resident there, and that by the end of the franchise period, in some six to eight years, there will be about 5,000 to 7,000 more people working at Kings Hill, and another 3,500 residents there. At Kings Hill alone, by the end of the franchise period, there will be some 10,000 to 12,000 people working there and some 7,000 living there. That clearly necessitates significant improvement and growth in rail services. Sadly, we are starting from a base in which rail services are clearly inadequate to meet demand. The chairman of the Borough Green and Malling rail users group, Mr. Jeremy Westhead, wrote to me yesterday, saying:
	"This morning, however, there were people standing all the way in from West Malling to Victoria on the 7.35. I am also aware of people who already drive from West Malling and Kings Hill to Chelsfield, Sevenoaks, Mottingham or Paddock Wood to avoid our line."
	Rail services are already inadequate on the Malling line, even before further development takes place. GoVia advises me that the franchise contract that it is due to enter into does not include significant changes in service levels, which is of serious concern.

Adam Afriyie: As a former resident of West Malling, may I say that it was clear several years ago that there were enormous pressures on the railways and the local roads? Will my right hon. Friend urge the Minister to take a serious look at the franchise and the rail network in the area?

John Stanley: My hon. Friend will have heard me describe the situation as wholly unsatisfactory. As he rightly pointed out, it will become even more unsatisfactory with the significant growth that is under way. I am delighted, however, to welcome my former constituent to the House.
	The main line from London through Tonbridge and Hildenborough is the second important line. The area has not undergone as much growth as Kings Hill, but there is significant growth in Tonbridge, where there is serious congestion on rail services at peak times. Once again, GoVia advises me that there will be no significant improvements in capacity on that line to London, which is unsatisfactory.
	As for the third line, from Edenbridge to London, there is some growth in Edenbridge. I can only describe the existing service to London as threadbare. It is so poor, in fact, that my constituents in Edenbridge and the surrounding villages get into their cars in the morning but, instead of going to Edenbridge, they drive across Kent and to Sussex or Surrey to find better railheads. GoVia says that it will not make a decision on improvements to Edenbridge to London services until a decision has been made on the Brighton rail utilisation study. I hope that, in his reply, the Minister can tell me when that decision will be made so that we can address the issue of rail services between Edenbridge and London.
	Finally, the important cross-country or east-west route linking Tonbridge, Edenbridge, Redhill and Gatwick has extremely significant but underutilised potential, particularly in the provision of an adequate rail service to Gatwick airport from Kent. Almost without exception, my constituents travel by car to Gatwick. They have to park at the airport and pay a heavy charge for doing so. They travel by car simply because there is not a frequent, reasonably rapid rail service to Gatwick from Kent.
	As we are creating Ashford International, with channel tunnel rail link domestic services from there, surely it must make sense to establish a decent rail link from Ashford—stopping, I urge the Minister, at Tonbridge and Edenbridge—to Redhill and Gatwick. If that service were in place, I am in no doubt at all that it would take many cars off the road and many more people would access Gatwick by rail. I am disappointed that, again, the Government have not insisted on getting any undertakings from GoVia, as far as I can see, on establishing a good rail service from Ashford directly to Gatwick and stopping at Tonbridge, Edenbridge and Redhill.

Damian Green: Since my right hon. Friend has mentioned the growth in Ashford, may I, though him, urge the Minister to address not just the Ashford-Gatwick link, about which I entirely agree, but how the growth affects the smaller village stations around towns such as Ashford, particularly Charing, Pluckley, Chilham and Appledore, all of which are threatened with cuts in services at a time when they will face rising demand, which we should all surely encourage? I hope that the Minister can address that issue as well.

John Stanley: I am grateful to my hon. Friend for his intervention, and I am sure the Minister will respond to the point, if he can.
	I make one last point to the Minister on service provision. I welcome one decision that the Government have made. They have rightly intervened on the drastic reductions in ticket office opening hours that South Eastern Trains, the outgoing franchisee, put out to consultation earlier this year. I was glad to see, buried in note 5 to editors at the end of the Department for Transport's stock market statement on 30 November, the following wording:
	"It is appropriate for the new franchisee to have the opportunity to review proposals on changes to ticket office hours on the SET network. It is expected that discussions among interested parties will take place in due course."
	I am grateful for that intervention by the Government, but when will the discussions take place and when will they be concluded? Can the Minister give me an assurance in reply to the debate that there will be no reductions in ticket office hours, as proposed by South Eastern Trains, until the new consultation and new review has been completed?
	Finally, the biggest single issue for my constituents in relation to the announcement that the Government made on 30 November is the implications for rail fares. Across my constituency, my constituents have been appalled at the Government's decision to allow GoVia to increase its fares by 3 per cent. above the rate of inflation for each of the first five years of the franchise.
	I refer to a small piece of history, which is relevant. There were three Conservative Members of Parliament who declined to support the last Conservative Government on the Second Reading of the rail privatisation Bill on 2 February 1993. One was the late Robert Adley, our colleague who knew more about railways, both in this country and overseas, than the rest of the House put together. Another was my hon. Friend the Member for Macclesfield (Sir Nicholas Winterton), and the third was myself.
	I declined to support the then Government on that Bill, not because I was opposed to rail privatisation, which I support—indeed, I believe that in broad terms it has produced a more successful outcome for rail passengers than if we had gone on with nationalised British Rail—but because I was not prepared to see my constituents, many of whom have to fork out a huge sum for their annual season ticket, put into the hands of an unregulated private sector monopoly, any more than I would want them in the hands of an unregulated public sector monopoly.
	Happily, the last Conservative Government, when our former colleague Dr. Mawhinney was Secretary of State for Transport, announced on 15 May 1995 that for the three years from January 1996 to 1999 rail fares would be capped at the rate of inflation each year, and for the four years after that, from January 1999 to January 2003, rail fares would be capped at 1 per cent. below the rate of inflation in each year. That was an excellent deal from the last Conservative Government for rail travellers and for my constituents, but as that deal expired in January 2003, the present Government have provided them with a much worse deal—indeed, it is a rotten deal.
	That situation seems set to continue under the franchise from GoVia. A fare increase of 3 per cent. above the rate of inflation for each of the first five years of the franchise means a real-terms increase of 16 per cent. over that five-year period. Unsurprisingly, the arrangement has met strong resistance from my constituents. The secretary of Tonbridge line commuters, Mr. Lionel Shields, wrote:
	"We believe that there is no justification for such draconian increases."
	The secretary of the Edenbridge and District rail travellers association, Mr. John Bigny, has also written to me:
	"The increase in rail fares at up to 3 per cent. above the rate of inflation has to be deplored. How many rail travellers are going to get increases in salary, wages and pension of 3 per cent. above inflation. A single pensioner is to get an increase of £2.20—that will be swallowed up by increased Electricity and Gas charges, let alone Council Tax."

Greg Clark: May I associate my constituents with those of my right hon. Friend, because they share the same issues? Our constituents will benefit not one jot from the channel tunnel rail link, but they will have to pay for it through the increase in fares.

John Stanley: I am coming to that very point and agree with my hon. Friend.
	The Minister will no doubt say that the increase in rail fares above the rate of inflation for five years is justified by rail investment. However, the overwhelming proportion of that rail investment will go into channel tunnel rail link domestic services, which will not benefit most of those who travel into London from mid-Kent and west Kent.
	The Minister knows that I foresaw that we could get into this position two years ago, and I have been campaigning for channel tunnel rail link domestic services to be ring-fenced financially, for channel tunnel rail link domestic services to be recognised as national infrastructure on which losses should be met by the general body of taxpayers—in other words, through the Department for Transport—and for a prohibition on cross-subsidy under the integrated Kent franchise from non-channel tunnel rail link services, which would result in a fair and equitable position.
	In a written ministerial statement on 30 November, the Secretary of State for Transport said:
	"It is therefore justifiable for the new operator to increase fares by 3 per cent. above inflation from January 2007 for five years to ensure there is fair balance between the taxpayer and fare paying passenger."—[Official Report, 30 November 2005; Vol. 440, c. 34WS.]
	My constituents and many others all over the franchise area regard the balance as grossly unfair. My constituents are having their fares ratcheted up way above the rate of inflation to meet losses on rail services—the channel tunnel rail link—that are of no use to them.
	Once again, I urge the Minister to ring fence channel tunnel rail link domestic services financially. Does he recognise that those services are national infrastructure and that losses should be financed by the general body of taxpayers? Will he introduce a prohibition on cross-subsidy from non-channel tunnel rail link services into the channel tunnel rail link, because unless such a prohibition is introduced, rail travellers in Kent and elsewhere will be treated grossly unfairly?

Derek Twigg: I congratulate the right hon. Member for Tonbridge and Malling (Sir John Stanley) on securing this important Adjournment debate. The document that he mentions will become public, and when that happens I will ensure that he gets a copy. Many improvements have been agreed, and I will dwell on some of them. It would be impossible to cover all the points in the time that I have left, but I will do my best to get through them as quickly as possible.
	Let me summarise the situation before I get to the main point. I believe that the contract that my Department has secured is a tough one that will deliver good value for taxpayers and real improvements for passengers. In particular, it commits the company to introducing the high-speed commuter trains that will use the channel tunnel rail link from 2009. Journey times to London for passengers from stations such as Ramsgate and others in east Kent and the Thames Gateway will be reduced by as much as 35 minutes. It will be a commuter service unlike that seen anywhere else in the country. It will provide the flagship Olympic Javelin service that will link St. Pancras with the Olympic village in Stratford in under eight minutes. In addition, the company has committed to improving performance across the franchise. More than £70 million will be invested in passenger services. It will build on the investment that has already been made: £600 million on new trains and £93 million on infrastructure improvements to allow them to run. A further £250 million is still to be invested in the new high-speed trains.
	Let me come to some of the more specific points. From the franchise commencement date in spring 2006 until the introduction of CTRL domestic services, services will be broadly the same as now in order to avoid repeated service alterations. Once the CTRL domestic services are introduced in 2009, they will operate between London St. Pancras and Stratford International, Ebbsfleet through the Thames Gateway to the Medway towns, and to Ashford, Ramsgate and east Kent. There will be comprehensive changes to the service pattern on existing lines at the same time—December 2009—to reflect the anticipated changes in travelling patterns and to simplify and improve performance. The new service specification is intended to provide capacity where it is most needed while making the best use of existing resources within the bounds of affordability. The Government's responsibility is to make the best overall strategic decision on services on behalf of the majority of passengers and of the taxpayer. With service changes of this magnitude, it is difficult to balance the needs of all, but we believe that we have provided significant benefits for the majority of passengers.
	The reorganisation will bring many benefits. For example, 10 per cent. more trains—an increase from 171 to 188—will come into London in the morning peak, and there will be a considerable improvement in off-peak services, with the number of trains increasing from 39 to 46 every hour during the daytime. The off-peak improvements are spread between inner and outer suburban services. Key improvements include two additional trains per hour on the following lines: Bexleyheath, Orpington-Sevenoaks via Grove Park, on the Herne Hill route west of Beckenham Junction, and on the Hastings line around the Tunbridge Wells area.
	In any exercise of this kind, it is not practical to deliver every request for services, but where representations were made, and it was possible to accommodate them, changes were put in place to address the most difficult problems for local rail users. There have been several rounds of consultation, through which a number of stakeholder concerns were identified and addressed—for example, the retention of the hourly service at quieter stations on the Maidstone East route.
	The franchisee intends to provide some services before 2009, when the timetable will change, that are additional to the basic specification required by the Department. They include a strengthened half-hourly service to Beckenham Junction from Victoria, an additional peak service between Faversham and Cannon Street, two additional peak trains between Ashford and Charing Cross, and a few additional mid-evening and late evening trains to various suburban and Kent destinations from London.
	With regard to train services in the right hon. Gentleman's constituency, there will be no immediate changes on the Borough Green and Wrotham-Maidstone East line. When the CTRL domestic services begin, more frequently used stations on this route, such as Borough Green and West Malling, will benefit from additional services in the peak. However, less busy stations such as East Malling will experience some reductions. Peak services between Tonbridge and the Kent coast will experience improvements on today's service at Paddock Wood, Marden and Pluckley. Services to Staplehurst and Headcorn remain unchanged. Off-peak, Paddock Wood and Staplehurst will lose one train an hour, mainly because the two stopping services, and one fast train to London will be replaced by two semi-fast services.
	Given that the new high speed service is expected to result in a significant transfer of demand from classic services east of Ashford, the volume of residual service required to operate via Tonbridge will be reduced. The resources released will be used to enhance some services in west Kent, particularly in the Tunbridge Wells area.
	Two trains an hour to Dover all day will link that corridor to east Kent, with alternate trains continuing to Ramsgate via Deal. The journey from London to Ramsgate and Margate via Canterbury West will no longer be direct, but passengers will be able to change at Ashford to pick up connecting services either using CTRL to Margate or the Victoria to Canterbury West via Maidstone service. We expect the operator to develop a timetable providing convenient connecting timings for that. Services from Tonbridge via Redhill to Gatwick airport fall under the Brighton main line route utilisation strategy. That is currently under consideration by the Department and an announcement will be made in due course.
	Subject to rolling stock availability and operational and financial practicalities, it is open to the franchisee before 2009 to run additional services or make additional calls at stations, provided that he can demonstrate that that is worth while and that any changes can be achieved without increasing the subsidy. I urge the hon. Gentleman and local groups to work with the operator to consider the scope for such changes.
	The hon. Gentleman referred specifically to fare changes. Passengers on the new high speed trains will pay around 20 per cent. to 35 per cent. more than passengers on the classic services, depending on the journey. In general, the premium will be approximately £1 or £2 on a single fare. Passengers will be able to choose routes via CTRL on high speed services or the classic routes to south London terminals. Passengers who use CTRL domestic services will pay premium fares to reflect the enhanced service that it will provide.It is not unusual for faster rail services to be more expensive than alternative slower services. Even with the premium fare, we anticipate a high demand for the high speed services.
	The retail prices index + 3 per cent. fare increases have been made to recognise the investment that has already gone into the railway in the region, and will help keep a balance between the taxpayer and the fare-paying passenger.
	The hon. Gentleman mentioned South East trains and the press release that was issued. We believe that the new franchisee should consider the matter and we wait to hear its views. I do not want to pre-empt those discussions. Clearly, once they have taken place an announcement will be made.
	As I stated earlier, more than £600 million has been invested in new rolling stock in Kent in the past three years. In addition, there has been £93 million of investment in power supply, stations, depots and related infrastructure in Kent. All the slam-door trains have been removed and many trains' interiors have been upgraded. That does not come without a cost. We have to ask whether it is fair for the taxpayer to foot most of the bill. We have to try to strike a balance between how much the taxpayer pays and how much of the cost passengers should bear.
	In summary, it is probably worth putting on the record that this has been a good time for the railway. Significant improvements have taken place, with more than 1 billion passengers a year using it. Every week, £87 million is being invested and we have the fastest growing railway in Europe. In addition, the public performance measure of 85 per cent. that was set for next March has been passed on three occasions in the past three periods. We are not complacent—there is more work to be done. We must ensure that we reach and exceed our target, but we have experienced an increase in the reliability of trains and the biggest single replacement of rolling stock and refurbishment in our time.
	I do not suggest that we should be complacent or that there is no room for improvement. However, important improvements and strides forward have been made. Performance is improving and passengers are receiving a better service. The current South East franchise has had its share of the benefits and the new integrated Kent franchise will experience more of them in the future.
	Question put and agreed to.
	Adjourned accordingly at twenty-four minutes to Eight o'clock.

Deferred Division

National Health Service

That the draft National Health Service (Dental Charges) Regulations 2005, which were laid before this House on 22 November, be approved.
	The House divided: Ayes 243, Noes 211.

Question accordingly agreed to.